Diageo and SABMiller merger rumoured

1st July, 2014 by Neal Baker

Diageo and SABMiller are enjoying a rise in their stock prices on the FTSE 100 amid rumours that the companies may merge.

stock+marketTrading news site Money Observer reports that the speculated merger – which would see the creation of a drinks group worth over £100 billion – could put to rest a rumoured bid by AB Inbev, who are said to be interested in using Diageo’s beer business as a strong route into the African market.

Diageo shares rose 1.2 per cent to 1,888p in early trading today (Tuesday 1 July) from 52-week low of 1,768p, while SAB was up 0.15 per cent to 3,394p from a 52-week low of 2,661p.

The combined businesses would generate annual free cash flow of around £5 billion, according to Barclays analysts. A deal would allow SAB to nip AB Inbev’s approach and access Diageo’s Guinness beer business which could produce cost savings of £430 million from using SAB’s global beer distribution network alone.

As the drinks business has reported previously, Diageo has also been building a stake in United Spirits for access to India, the world’s largest whisky market in terms of volume, in which it sees an opportunity to circumvent the country’s strict rules on imported goods.

If successful, United’s network would also allow Diageo to distribute its own beverages and high margin premium spirits, such as Johnnie Walker whisky and Smirnoff vodka.

India’s alcoholic beverage market is estimated to be worth upward of $16 billion (£9.34 billion) and growing.

Leave a Reply

Your email address will not be published. Required fields are marked *

Please note that comments are subject to our posting guidelines in accordance with the Defamation Act 2013. Posts containing swear words, discrimination, offensive language and libellous or defamatory comments will not be approved.

Subscribe to our newsletters

Experienced Administrator

The Drinks Business
Central London, UK

Sales Executive (London – Craft Spirits)

Bimber Distillery
London, UK

2 x Buying Assistants

Berry Bros. & Rudd
Battersea and Basingstoke, UK

Temporary Christmas Sales Support - Wines & Spirits

Harrods
Knighsbridge, London, UK

Head of Wholesale

Hispamerchants Ltd
London, UK

Sales Manager

Hispamerchants Ltd
London, UK

National Sales Manager

Maverick Drinks
Field based, UK

Regional Sales Executive

EWGA
Gloucestershire, UK

The World Bulk Wine Exhibition

Amsterdam,Netherlands
20th Nov 2017

The Drinks Business Green Awards 2017

London,United Kingdom
20th Nov 2017

The Global Spirits Masters Lunch

London,United Kingdom
1st Dec 2017
Click to view more

Green Awards 2017

Deadline : 25th October 2017

The Global Riesling Masters 2017

Deadline : 30th October 2017

Click to view more

Champagne Masters 2017

The only Champagne blind tasting in the UK, the competition will reward the best wines in the following categories:

The Global Rosé Masters 2017

With wines from the palest of pink to almost ruby red, bone dry to almost cloyingly sweet, reductively handled to barrel-aged, as well as gently spritzy to fully sparkling.

Click to view more