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INTERNATIONAL FINANCE: SABMiller plc

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  • Post Date 2018-11-09T10:08:02+00:00
  • Post Category Research Paper Queries

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INTERNATIONAL FINANCE: SABMiller plc

Introduction

SABMiller plc serves as the second largest brewer in the world in terms of revenue generation. The company was established in 1895, and operates in beverage and brewing industry. It operates in 80 countries, with a market capitalization of # 42 billion, as at end of 2015. The company is constituent of FTSE 100 Index and it is publicly traded at LSE.  The company holds 9.7% of the total worldwide beer market share. On the other hand, Anheuser-Busch InBev acts as the largest brewing company in the world, with more than 200 brands portfolio and more than subsidiaries. AB InBev has a 20.8% market share of the global brewing industry. The company is listed in Euronext Brussels and has secondary listing in Johannesburg and New York Stock Exchanges and it employs more than 155 000 people around the world.

In October 2015 AB InBev, announced all cash bid to acquire SABMiller for $ 104 billion. The merger of the two companies would make the largest brewer in the world with more than 30% of the total global brewing industry market share. The announcement of the merger had a major impact on the share market of the two companies, by affecting the expectation of the potential and existing investors. For this reason, this report seeks to analyses the impact that the announcement on the acquisition of the SABMiller by the AB InBev had on the share performance of both companies. The report commences by looking at the in-depth background research about the companies involved, then looks at price impact on SABMiller and AB InBev following news announcement. The report ends by carrying out the efficient market hypotheses tests.

Background research about SABMiller and AB InBev

  1. SABMiller

SABMiller has total assets worth $ 27,482 million and in 2014, it generated operating income amounting to $ 4.2 billion. As at 2014, the company employed more than 70 000 employees and had seven subsidiaries that include Foster’s Group, Bavaria Brewery, Miller Brewing Comp any, and South Africa Breweries.  The company was listed in London Stock Exchange in 1999, in order to raise capital that was required to purchase the Miller Brewing Company in North America. In 2011, the company engaged in a hostile takeover of Fosters at $ 9.9 billion. The company capital is 26.68% from debt and 73.32% from equity. This means that the company is not highly levered, and it balance sheet is health, that is, it can easily get loan from the financial institutions to fund its operation……………………..

 

References

Google Finace 2016. Anheuser Busch Inbev SA (ADR). Retrieved from https://www.google.com/finance/company_news?q=NYSE%3ABUD&ei=PG_NVqGTBMycUNGCpMAJ&start=40&num=10

Google Finance 2016. Anheuser Busch Inbev SA (ADR). Retrieved from https://www.google.com/finance/historical?q=NYSE%3ABUD&start=60&num=30&ei=VfzOVomJCoyjsgGpsaCICQ

Google Finance 2016. SABMiller plc(LON:SAB). Retrieved from https://www.google.com/finance/company_news?q=LON%3ASAB&ei=qMTNVvmQF9bAsAHnkJvABw&start=10&num=10

Guru Focus 2016. 10-Year Treasury Constant Maturity Rate. Retrieved from http://www.gurufocus.com/economic_indicators/37/10year-treasury-constant-maturity-rate

Harder, S. (2010). The Efficient Market Hypothesis and its Application to Stock Markets. München: GRIN Verlag GmbH.

Palan, S. (2007). The efficient market hypothesis and its validity in today’s markets. München: GRIN Verlag.

SABMiller plc 2015. Annual Report 2014. SABMiller plc

Yahoo Finance 2016. SABMiller PLC (SAB.L). Retrieved from https://uk.finance.yahoo.com/q/hp?s=SAB.L&a=2&b=8&c=1999&d=1&e=25&f=2016&g=d&z=66&y=66


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