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Strategies & Market Trends : Speculating in Takeover Targets -- Ignore unavailable to you. Want to Upgrade?

To: richardred who wrote (3780)9/22/2014 12:09:54 PM
From: richardred  Respond to of 6794
Beer Industry Witnesses Another Round of Consolidation

By Zacks Equity Research 5 minutes ago

A lot has been happening in the global brewing industry which is hinting at another round of consolidation. After the rumor of a possible acquisition of SABMiller plc ( SBMRY) by Anheuser-Busch InBev SA/NV ( BUD) aka AB InBev, The Wall Street Journal last week reported that a Russian company is acquiring American sub-premium craft beer maker, Pabst Brewing Company.

As per the news sources, Russia’s biggest independent brewer, Oasis Beverages has partnered with a California-based private-equity firm, TSG Consumer Partners LLC, to acquire Pabst Brewing Company. As per the agreement, Oasis Beverages will be entitled for a majority stake while TSG will take a minority stake in the craft beer company. The Wall Street Journal anticipates the deal to range between $700 million and $750 million.

Founded by Jacob Best in 1844, the Pabst Brewing Company was named after Frederick Pabst in 1889. The company is currently owned by a consumer-products investor C. Dean Metropoulos & Co., who had acquired it in 2010 for $250 million from a charitable foundation. Currently, the company with its over two dozen brands accounts for nearly 3% of the U.S. beer market.

Oasis Beverages’ recent move exhibits its intent to enhance operations in the U.S. alcoholic-beverage market. The company currently operates in Russia, Belarus, Kazakhstan and Ukraine.

We have noticed that the alcoholic beverage industry has been witnessing major consolidation in recent times. All the companies are taking utmost efforts to increase their share in this matured U.S. beer market and in other global markets either through merger & acquisition or by expanding into new regions.

Earlier, Bloomberg, on Sep 14 reported that SABMiller approached Heineken NV ( HEINY) with a buyout offer which was rejected by the later. It is believed that the acquisition offer made by SABMiller was to defend itself from AB InBev’s takeover bid.

Some other important acquisitions made in 2014 include the buyout of Beam Inc. in January by Japanese beverage company, Suntory Holdings Ltd., for a sum of $16 billion. Subsequently, AB InBev, in order to strengthen its position in the Asia-Pacific region, reacquired its South Korean asset – Oriental Brewery – for a sum of $5.8 billion from KKR and Affinity Equity Partners. Further, Constellation Brands Inc. ( STZ) is anticipated to close its pending acquisition of Casa Noble, a premium quality tequila brand, by the end of this month.

We expect the consolidation trend that has spread across the beer industry to continue as this will not only facilitate the companies in increasing their market share but will also help in reducing costs through leverage from suppliers and distributors.

Further, presence of large amounts of cash on corporate balance sheets, favorable credit markets, low interest rates, and strength in the stock market have also acted as confidence boosters for the companies.

Looking at the share movement of both the buyer and seller companies after any merger & acquisition news, we believe that shareholders extend full support to big acquisitions so that the companies can beef up their market presence amid rampant consolidation.

Therefore, looking at the recent developments, we suggest our investors to add and hold some alcoholic-beverage companies to their portfolio. Apart from AB InBev, Boston Beer Company ( SAM) and Molson Coors Brewing Company ( TAP) are the premium beer makers which show huge growth potential as both the companies are making efforts to expand.

To: richardred who wrote (3780)9/28/2014 10:34:53 AM
From: richardred  Respond to of 6794
KKR in the drivers seat with Treasury Wine bid
Date September 29, 2014 - 2:30AM

Simon Evans and Sarah Thompson

Private equity giant Kohlberg Kravis Roberts is in the prime position to win a recommendation from the board of Treasury Wine Estates after lodging a bid significantly higher than rival firm TPG Capital.

The Treasury board is understood to have held KKR to a price of around $5.20, which values Australia's largest wine company at $3.4 billion. KKR and junior partner Rhone Capital offered that amount on August 4, up from the original solo KKR proposal of $4.70 which became public on May 20.

The board of Treasury and its advisers were still locked in high-level meetings on Sunday night as they approached a final decision, which may be announced to the Australian Securities Exchange as early as Monday.

Treasury chairman Paul Rayner has been under intense pressure after a series of missteps at the world's largest stand-alone wine company over the past 15 months, with a change of ownership now highly likely for the owner of Penfolds, Rosemount, Wolf Blass, Wynns and Lindeman's.

KKR and New York-based Rhone lodged a formal takeover bid for Treasury about 5pm on Friday, while TPG also did likewise in time to meet a secret deadline put in place by the Treasury board and its advisers from Goldman Sachs.

The merits of each offer were closely examined by the Treasury camp over the weekend, with both bids ­understood to have a lower-than-usual debt component because of the unpredictable nature of the agricultural industry in which Treasury operates.

A spokesman for Treasury declined to comment on Sunday.

Both private equity firms lodged indicative proposals in August valuing Treasury at $3.4 billion and made separate official bids after an exhaustive and intense due diligence period over the past few weeks, which included visits to offshore operations and wineries around Australia.

Both bids were pitched under a scheme of arrangement proposal.

The decline in the Australian dollar has played into the hands of the US-based private equity bidders, with each 1¢ drop delivering a $2.3 million injection to the company's profits.

The weaker Australian dollar delivered more financial firepower for the final bids because it makes Australian assets cheaper, with the maker of Penfolds and Wolf Blass increasingly likely to end up with an offshore owner.

While both KKR and its rival TPG are building in long-term projections for where the Australian currency is likely to be against the US dollar for the next few years, most experts believe it will continue to fall, meaning the timing of the US predators is good as they look to rebuild profits should a bid be accepted by the Treasury board.

Stephen Harvey, chairman of Deloitte's Australian Wine Industry Group, said the local wine industry was in for a much better era when it comes to currency, with local exports to become much more competitive on the shelves of retailers in the US and Britain.

"We're in a much stronger position," he said.

Treasury itself outlined some foreign exchange sensitivities on August 21 when it delivered its full-year results.

It also gave an outline of its foreign exchange risk management approach around hedging for the next two years for both the US dollar and British pound, but in practical terms analysts believe the $2.3 million impact is still around the mark when it comes to the US currency shifts.

Stockbroking house Citi says the upside for the entire Australian wine sector is substantial from a sustained decline in the Australian currency, and for Treasury it will translate into better profit margins.

KKR and junior partner Rhone Capital lifted an indicative offer for Treasury on August 4 to $5.20 per share, while on August 11 TPG Capital made a proposal also pitched at $5.20 per share. They both valued Treasury at $3.4 billion, with the rival proposals made via a scheme of arrangement where Treasury shareholders will vote at a meeting on a preferred bid.

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