Comment: SABMiller the suitor could be consumed

Takeover activity comes in sectoral cycles. Recently it was Big Pharma setting the pace – with US drugmakers led by Pfizer trying to alleviate earnings headwinds by looking for acquisitions allowing them to re-domicile in other lower‑taxation jurisdictions. Banks and the oil giants have also had their moments in the consolidation spotlight.

Could we now, courtesy of a transformational deal, be about to see the drinks industry move front and centre? Dutch brewing giant Heineken sent bigger rival SABMiller about its business in every sense at the weekend following an unsolicited takeover approach. The family‑owned Heineken made it clear that it wanted to keep its independence, and it has the shareholder structure to do it. But, as so often happens, an abortive acquisition attempt flips the disappointed suitor “into play”.

Now it is thought SABMiller will face a takeover approach from Anheuser-Busch InBev, the world’s biggest brewer compared to SAB’s number two status.

At first sight, one would think merging the biggest two players in any sector would be a non-starter with regulators. However, it is far from certain the regulatory rug would be pulled out from under any such combination.

There look to be no insurmountable hurdles to such a deal.

The only real area of combined market share concern is in North America where AB Inbev has the old Anheuser-Busch business and SABMiller has MillerCoors, its joint venture with Molson Coors. The joint venture would almost inevitably have to be divested for any AB Inbev/SABMiller market consolidation to fly. But it would be a small price to pay for the wider synergistic benefits a merger would give, particularly in emerging markets around the world.

And if it did happen it could change the mood music for further notable drinks industry consolidation. Brewers, as well as spirits giants such as Diageo and Pernod Ricard, have been constrained by the slackening momentum in emerging markets.

Those developing markets have offset the long-term relative stagnation in mature western drinks markets. A dramatic tie-up at the top table via AB Inbev/SABMiller might focus minds that acquisitions could lessen the dependence on emerging markets for future growth.

Greggs’ words more than pie in the sky

You hang around long enough, you see everything. Greggs – a who-ate-all-the-pies retailer if ever there was one – is re-inventing itself with healthier option sandwiches, coffee and outside tables to watch the world Parisian-style. Profit expectations and shares up sharply. Piece of cake (sorry).