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SAB soars on merger report
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November 28, 2001: 7:30 a.m. ET
Report: Interbrew may bid $5.6 billion for South African Breweries
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LONDON (CNN) - South African Breweries, the world's fifth-largest brewer, saw it stock soar after the FT said Interbrew was preparing an acquisition.
Interbrew, the brewer of Stella Artois, said on Wednesday it had undertaken a preliminary study of SAB that may or may not lead to a takeover. The Belgian brewer said no approach had been made.
The acquisition would create the world's second-largest brewer, the Financial Times said, citing documents that indicated an all-stock offer could be made by December 3 at a price of about $5.6 billion.
SAB (SAB) was valued at about £3.4 billion ($4.8 billion) at the close of London trading on Tuesday. The company's stock rose more than 9 percent to 483 pence in midday London trading on Wednesday.
Interbrew's stock dropped 5.1 percent to  27.90 on concerns it may overpay for SAB and could be forced to issue shares to pay for any acquisition.
"There is fear of overpayment," Gerard Rijk, beverages analyst at ING Barings, told Reuters.
SAB would have a price tag of $5.5 billion to $6 billion but Interbrew does not have enough cash and would need to carry out a new share issue or a share exchange, diluting the value of its existing stock, Rijk said.
Interbrew is still involved in a wrangle with British competition authorities over its $3.3 billion acquisition of Bass Brewers and has been told to sell the Carling brand in Britain. It recently bought German brewer Beck's.
The merger would be a defensive move to secure additional distribution channels for the Beck's brand and to pre-empt a separate merger involving SAB, Scottish & Newcastle and Miller (MO: down $0.97 to $45.21, Research, Estimates), the second-largest U.S. brewer, Rijk said 
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