SABMiller still king of the Castle

BY AGENCIES

BREWING giant SABMiller's US$10 billion acquisition of Australia's Foster's, which was approved by Aussie authorities on Friday, will ensure that the SA-born company stays tops down under.

SABMiller said it now expects its biggest ever deal to be sealed by the end of 2011 - making it number one in the Australian beer market with a 50% market share.

The purchase is part of SAB's strategy to move more aggressively into the emerging markets of Africa, Latin America, Asia and Eastern Europe. It also counters falling volumes in its key markets of the US and Central/Eastern Europe as consumers there prepare for a more austere few years ahead.

In a statement to the JSE on Friday, SAB said the Australian Federal Treasurer on recommendation from the Foreign Investment Review Board (FIRB), had approved its acquisition of Foster's and the remaining 50% of Pacific Beverages.

But what stands out about the Australian approval is the set of undertakings SAB had to enter into before it was given the go ahead.

A press statement issued by Australian deputy prime minister and treasurer Wayne Swan showed that Australia had ensured the Foster's operations, jobs and brand were kept at home.

The undertakings, said Swan, recognise the significance of Foster's "to our economy and to our community, and support Australian jobs".

In terms of SAB's commitment, the management of Foster's operations will continue to be located in Australia; it will not relocate any of Foster's existing brewing facilities offshore to produce beer for Australian domestic consumption; and it will continue to invest in Foster's "iconic" Australian brand portfolio.

However, it is Australia's ability to elicit a jobs promise from the brewing giant that could serve as an example to SA in reviewing major foreign investments in local companies.