SABMiller courts Bavaria

Modern Brewery Age,  Jan 24, 2005  

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SABMiller is said to be a leading contender to purchase Colombia-based Grupo Empresarial Bavaria, one of the largest beer makers in South America. The deal could be worth anywhere from $5 to $9 billion, according to various analysts.

However, as the story broke in the press, Bavaria management categorically denied that the company was up for sale.

According to early reports, SABMiller, Heinken and InBev were the prime suitors for Bavaria, which is publicly traded in Colombia and has a reported market capitalization of about $2.6 billion. The brewer is controlled by a gentleman named Julio Mario Santo Domingo, and has a 90 percent market share in its home country, as well as dominant shares in Ecuador, Peru and Panama. Bavaria's brand portfolio includes brands like Club Colombia, Club, Aguila, Cusquena, Cristal and Atlas.

The company, which also makes soft drinks, has been getting competitive pressure from InBev, which has been seeking to expand in Bavaria's markets. InBev's interest in these markets made the company an early favorite in the bidding. But InBev is said to have dropped out of the bidding due to the high price.

"Bavaria is an attractive asset," said one analyst in the Wall Street Journal, "but the valuations being discussed are insane." If Bavaria were to be sold for the high-end price of $9 billion, that would be 12 times its 2004 earnings of $750 million.

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