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Investors Toast SABMiller Takeover, Carlsberg Cutbacks

Nov. 11, 2015
Anheuser-Busch InBev's $121 billion deal is the third biggest takeover in global corporate history. 

LONDON—SABMiller shares jumped Wednesday as the world's top brewer, Anheuser-Busch InBev, wrapped up a vast deal to take over its British rival, while the sector was lifted also by restructuring at Carlsberg.

European stock markets rose also on Chinese stimulus hopes, mirroring earlier gains in Asia following a trail of disappointing economic data from Beijing.

A sagging early Wall Street brought European markets off their highs, but did little to spoil the upbeat mood prompted by events in the beer market.

The brewing sector grabbed the headlines as Belgian-Brazilian behemoth ABInBev announced it had finalized a $121-billion deal for its nearest rival SABMiller, in the third biggest takeover in global corporate history.

The blockbuster transaction, worth the equivalent of 112 billion euros including debt, will bring together InBev's top lagers, like Beck's, Budweiser and Stella Artois, with SABMiller brands Foster's Grolsch and Peroni.

"The InBev/SABMiller deal is huge and markets will always toast a deal of this magnitude," Oanda analyst Craig Erlam told AFP.

ABInBev is eager to tap into booming developing markets in Africa and China, where SABMiller's joint venture produces Snow--the world's best selling beer by volume.

News of the takeover sent SABMiller's share price jumping to close 1.9 percent up at £40.50 ($61/57 euros)--below InBev's agreed cash offer price of £44.

The vast takeover helped push the London stock market into positive territory for the first time in five days.

London's benchmark FTSE 100 index closed 0.4% higher, Frankfurt's DAX 30 climbed 0.7% and the CAC 40 in Paris won 0.8% compared with Tuesday's close.

In Brussels, meanwhile, InBev shares added 2.2% to 113.60 euros.

"This kind of deal underpins the fact that there is still plenty of cash on the sidelines to be put to use if there is value in synergies," said Mike McCudden, head of derivatives at broker Interactive Investor.

"Deals of this scale should prompt some follow-through merger and acquisition activity, but overall longer term investor sentiment remains fragile."

Across in Copenhagen, Danish brewer Carlsberg said Wednesday it was cutting 2,000 jobs as it tries to come to grips with a shrinking Russian beer market.

The cull comes as it announced nearly 10 billion Danish kroner ($1.43 billion, 1.34 billion euros) in restructuring charges and reductions in the value of its assets.

Investors cheered the news, sending Carlsberg shares fizzing 6.6 percent higher to 591 kroner in a market up 1.5%.

"A host of fairly good earnings reports and the news that Carlsberg would be restructuring--including cutting staff in a bid to return to growth--has certainly aided investor sentiment," added analyst Brenda Kelly at traders London Capital  Group.

"These days companies are all about cost cutting--but at some stage down the line investors will demand growth."

U.S. stocks drifted up in opening trading, pulled higher by the beer merger and Chinese online retail giant Alibaba's $8 billion score in its "Singles Day" shopping spree, but later fell back.

Copyright Agence France-Presse, 2015

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