AB InBev to Take Investor Interest Away From Nestle, Exane Says

Photographer: Simon Dawson/Bloomberg
  • Nestle may lose position as default European consumer stock
  • Analysts say AB InBev's sales growth will surpass Nestle's

Anheuser-Busch InBev NV, the brewer that is buying SABMiller Plc in the industry’s biggest takeover, will probably replace Nestle SA as investors’ main European consumer staples holding given stronger growth prospects, analysts at Exane BNP Paribas said.

The Budweiser maker’s underlying earnings per share will rise at least 14 percent on average each year through 2019, while Nestle’s gains will be about 8 percent, Jeff Stent and Eamonn Ferry wrote in a note Friday.

AB InBev will follow its $107 billion bid for SABMiller by cutting costs and maintaining like-for-like sales growth of 6 percent to 7 percent a year, surpassing that of Vevey, Switzerland-based Nestle, the analysts said. In four years, the Belgian brewer may seek another “transformational deal,” they wrote. Meanwhile, Nestle will probably continue to divest underperforming food and beverage assets and expand in areas such as skin health that are outside its main expertise, according to Exane.

“Coupling all the above observations with an ABI management team that are arguably the most shareholder-friendly in the European consumer staples universe, we cannot help but think that ABI will likely surpass Nestle to become the new default holding within European consumer staples,” Stent and Ferry said.

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