According to Brazilian magazine Veja, billionaire Jorge Lemann is planning to bid on the British business behind Smirnoff, Guinness and Johnnie Walker.
Talk of Lemann, who founded 3G Capital and owns a stake in Anheuser-Busch InBev (ABI), initiating such a move comes amid expectations that ABI is preparing to make an acquisition. The Financial Times suggested it was due to the company deleveraging following its $20bn acquisition of Mexican beer company Modelo in 2012.
Other alleged targets are SABMiller – the brewer of Grolsch, Miller and Peroni – as well as PepsiCo and Coca-Cola.
JP Morgan analyst Komal Dhillon claimed that a Diageo takeover would give ABI exposure to Africa. “We believe Diageo’s beer assets, which would give ABI a foothold in Africa, could be the main appeal,” he said.
However, broker Jefferies thought an outright bid would be unlikely given that 3G would need to raise £48bn to buy out the company.
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Due to the announcement, Diageo saw its shares rise £1.20 to £18.80. Prior to the increase, Diageo’s shares had underperformed the FTSE 100 by 16 per cent and the FTSE Europe consumer goods index by 27 per cent since July 2013.
In an interim management statement Menezes said: “Our performance in the quarter reflects continued tough conditions in the emerging markets and subdued consumer demand in some developed markets. However it also reflects the actions we have taken to ensure we are building a stronger business.
“Of key importance is that depletions continue to outpace shipments as we embed our sell out culture. In addition, our decision to destock some wholesale channels in South East Asia and West LAC will improve our ability to track consumer and customer trends and reduce future volatility.”
It’s not the only deal 3G Capital has been linked to in 2015. In March, the firm teamed up with Warren Buffet’s investment company Berkshire Hathaway in a $100bn deal to merge Kraft Foods with Heinz.
The equity firm also allegedly considered a takeover bid of SABMiller – which led to a similar rise in shares.
By Shané Schutte
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