SABMiller makes changes in its African ops

Announcing the operational changes on Monday, the brewing giant said the changes in its African operations, effective from 1 January, were a part of its strategic alliance agreement with the Castel Group.

Amendments have also been agreed to the terms of the strategic alliance agreement to provide for improved sharing of best practice and technical expertise, and a more precise methodology for the existing mutual pre-emptive rights over the groups' respective beverage operations in Africa, excluding SA and Namibia.

The existing strategic alliance agreement, pursuant to which SABMiller has a 20% shareholding in Castel's other African beverage interests and Castel has a 38% shareholding in SABMiller's principal African holding company, is otherwise unchanged.

Commenting on the changes, Graham Mackay, Chief Executive of SABMiller said: "Our relationship with the Castel Group has gone from strength to strength over the decade that the strategic alliance has been in place.

"We believe that these operational changes will benefit our local businesses, our minority partners, and our customers and consumers in both Angola and Nigeria, and demonstrate both groups' long-term commitment to the alliance."

Pierre Castel, Executive Chairman of the Castel Group, said after ten years of alliance, it was deemed appropriate to review and upgrade the partnership with a stronger focus on synergies.

SABMiller's portfolio of brands includes Pilsner Urquell, Peroni Nastro Azzurro, Miller Genuine Draft, and Grolsch, as well as leading local brands such as Aguila, Castle, Miller Lite, Snow, Tyskie and Victoria Bitter.

SABMiller and Castel are two of the leading brewers in Africa with strong and complementary market positions on the continent.

SABMiller operates in 15 countries in Africa - Botswana, Comores, Ethiopia, Ghana, Kenya, Lesotho, Malawi, Mayotte, Mozambique, Nigeria, South Sudan, Swaziland, Tanzania, Uganda and Zambia.

The Castel Group has beer, carbonated soft drink and mineral water interests, primarily in west and central Africa, and the Indian Ocean.

Its operations cover Algeria, Angola, Benin, Burkina Faso, Cameroon, Central African Republic, Chad, Cote d'Ivoire, Democratic Republic of Congo, Equatorial Guinea, Ethiopia, Gabon, Gambia, Guinea, Madagascar, Mali, Mauritius, Morocco, Niger, Senegal, Togo and Tunisia.

As at end December 2010 the value of the gross assets of Castel's Nigerian businesses was US$75 million and at end September 2011 the value of the gross assets of SABMiller's Angolan businesses was US$918 million.

As a result of the changes, the groups will share at the strategic alliance level, the aggregate profits and cash flows of their operations in Nigeria and Angola based primarily on the relative contributions of their businesses in each country.

In Nigeria the businesses are of approximately equal size. In Angola, the Castel business is approximately three times as large as SABMiller's operations.

Accordingly, the transaction is expected to have an immaterial impact on SABMiller's pro forma earnings per share, the company said.

At 12:10 on the JSE, SABMiller's share price was up R1.54 to R295.38, while in London it was up 12.5 pence to 2,345.0 pence.