LONDON (Reuters) - Global brewer SABMiller is joining forces with Turkey’s Anadolu Efes to become the number two brewer in Russia in a deal which gives the London-based group a 24 percent in the leading Turkish brewing group.
SABMiller, which last month agreed to buy Australian rival Foster’s for $10 billion (6 billion pounds), said on Wednesday the deal will put it behind Carlsberg in the world’s fourth largest beer market and yield cost savings of $120 million a year.
Under the deal, SABMiller will transfer its Russian and Ukrainian beer business for a 24 percent stake in Anadolu Efes, with Anadolu Group, controlled by the Turkish Yazicilar and Oxilhan families, holding 42.8 percent, leaving a free float of just over 33 percent following a capital increase.
The alliance will be the focus of both groups’ interests in Turkey, Russia and the former Soviet Union, central Asia and the Middle East, and will include the Turkish group’s 89 percent share of its domestic beer market.
The deal puts an enterprise value of around $1.9 billion on SABMiller’s Russian and Ukrainian business.
The agreement came as SABMiller reported weak-than-expected first-half beer volume figures due to weakness in Europe and China, and warned margins were constrained by higher commodity costs and increased marketing spending.
“The strategic alliance may go some way to countermanding investor concern over SAB’s European exposure, with the deal set to bolster the group’s position in Russia,” said analyst Martin Deboo at Investec Securities.
The move will give the combined group around an 18 percent volume share of the Russian beer market, similar to Anheuser-Busch InBev and behind Carlsberg’s share of over 36 percent. In value terms, the new group will have a share ahead of AB InBev in the Russian market.
Analysts added it was a sensible move for SABMiller to bring together the number four and five players in Russia joining Efes’ 11 percent market share to SABMiller’s 7 percent pushing it above former No 3 player Heineken.
SABMiller shares rose 1 percent to 22.84 pounds while Anadulo Efes increased 6.8 percent to 22 lira by 0845 GMT.
“Anadolu Efes’s leading position in beer and soft drinks in the Turkish market and an alliance for further growth and acquisitions in the CIS and Middle East are highly attractive. The prospects for these markets are excellent,” SABMiller Chief Executive Graham Mackay said in a statement.
Under the deal which is expected to be completed by the end of the year, both SABMiller and Anadolu have first rights over each other’s shares if either party seeks to sell shares in Anadulo Efes.
SABMiller also said its underlying beer volumes rose 3 percent in the first half (April-September) of its financial year compared to a Reuters survey of analysts which forecast a 4 percent rise, due largely to poor summer weather in Europe and flooding in China.
The group also added that trading in its first half had been in line with its own expectations. SABMiller reports half-year profits on November 17.
Reporting by Sudip Kar-Gupta and David Jones; Editing by David Cowell and Hans-Juergen Peters