HOLLY WILLIAMS
PERONI and Grolsch firm SABMiller toasted a strong summer for beer sales despite a "material" currency hit ahead of a potential blockbuster deal with the owner of Budweiser and Stella Artois to create a drinks giant worth more than £180 billion.
SAB - which last month revealed an approach by rival Anheuser-Busch InBev in what would mark the biggest ever takeover of a British company - said surging demand in emerging markets such as Africa and Latin America helped underlying net revenues lift 6% and sales by volume rise by 2% over the three months to the end of September.
Good weather also saw net revenues rise 3% across Europe in the quarter, with its Peroni Nastro Azzurro brand remaining popular in the UK, although sales in the region remained flat overall in the first half and interim sales by volume fell 3%.
SAB revealed that the strong US dollar took its toll on reported results, with net revenues down by 9% in the second quarter and half-year as a whole.
AB InBev has just over a week to go to make a formal bid for SAB or walk away under UK takeover rules.
Belgium-based AB InBev - the world's biggest beer firm - is thought to be working on a bid worth around £45 a share, valuing FTSE 100 listed SAB at more than £70 billion.
It is understood AB InBev first put forward a proposal of around £40 a share, but is now sweetening its approach after reportedly being rebuffed by SAB.
Shares in SAB have rocketed by 28% since AB InBev's takeover hopes were first revealed on September 16, although the stock was nearly 2% lower on SAB's currency woes highlighted in its latest trading update.
If AB InBev clinched the deal, it would rank in the top 10 takeovers in global corporate history. It has until October 14 to make a formal offer, although the deadline can be extended.
SAB posted an 11% leap in net revenues across Africa in the second quarter, while they rose 9% in Latin America.
Group-wide soft drinks sales by volume were 4% ahead in the first half.
Alan Clark, chief executive of SABMiller, said: "Growth accelerated in the second quarter of the year, underpinned by our unmatched footprint in the growing beer markets of the world."
He added: "While adverse currency movements have materially impacted our reported results, we have a strong business with exceptional long-term prospects."
Phil Carroll, an analyst at Shore Capital, said "extreme" changes in foreign currency rates would likely see City forecasts for SAB trimmed, but said the underlying performance at the group was "strong and might surprise some in the market".
He remains upbeat over the chances of a tie-up between SAB and AB InBev.
"Clearly a deal of this size has its complications and execution risk but we believe these can be managed and overcome," he said.
AB InBev has a stable of more than 200 beers, including Corona, Beck's, Leffe and Hoegaarden.
SAB has Miller, Foster's, Coors and Bulmers cider. It employs around 69,000 people in more than 80 countries and has global annual sales of more than 26 billion US dollars (£17 billion).
Its suitor and larger rival AB InBev, based in Leuven, Belgium, has a 155,000-strong global workforce and makes more than 47.1 billion US dollars (£30.5 billion) in global revenues.
SAB attempted to acquire Heineken a year ago but its advances were rebuffed.
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