2016 BUSINESS NEWSMAKER: Brewing up a storm
Dealing with all the demands attendant on a deal the size of ‘Megabrew’ — and one involving an SA icon — meant that Carlos Brito and his transaction were rarely off the front pages during 2016
Carlos Brito became a 2016 newsmaker of the year contender as far back as November 10 2015. That was the day the CEO of the largest beer company in the world formally announced a bid for the second largest.
Anheuser-Busch InBev’s £79bn offer for SABMiller broke all sorts of records: it was the largest-ever merger in the global consumer industry; the largest-ever transaction involving a JSE-listed company; and the merged entity was set to dominate the global beer industry, accounting for about 27% of worldwide sales and almost 50% of global industry profit.
But perhaps what clinched the title for Brito as Financial Mail’s business newsmaker was that this mega-deal involved one of SA’s corporate icons. SAB’s 17-year development into the SABMiller organisation acquired by AB InBev was one of the few SA stories of a local hero making good on the global stage. Inevitably, every step between AB InBev’s offer and shareholders’ acceptance was going to be watched very closely by the media.
The 50% premium on the pre-offer share price seemed to ensure success. While there were some complaints that £44 (and ultimately £45) did not adequately reflect the long-term profit trajectory on SABMiller’s emerging-market horizon, most analysts and shareholders reckoned it was more than enough. But the generosity wasn’t sufficient to seal a deal of this size and consequence. It wasn’t just shareholders who were making demands; there were employees, regulators, competitors and suppliers across the globe needing to be placated.
Dealing with all these demands meant Brito and his transaction were rarely off the front pages during 2016. From proposals to shed operations that generated more than 50% of SABMiller’s volumes to appearances before a US congressional committee, Brito was there making news.
The most precarious (and therefore the most newsworthy) nonshareholder challenge was without doubt that of the SA
competition authorities or, perhaps more precisely, of minister of economic development Ebrahim Patel. The competition authorities and Patel presented two types of challenges. The one potentially fatal challenge was that they would find good reason to prohibit the merger. Brito had demonstrated how huge chunks of SABMiller could be sold off without damaging the deal’s emerging-market imperative, but without SA (and its access to Africa) the transaction would have been fundamentally flawed.
The second type was the competition authorities’ ability to delay the deal. Brito, who evidently believes time is money, was determined to complete the deal as quickly as possible. Not for him the sort of interminable delays that dogged Walmart’s acquisition of Massmart in 2011.
Adding to the frisson of the beer deal were reports that a phalanx of advisers and senior executives were set to score multimillion-dollar bonuses if the deal was completed ahead of the August dividend payment date. The deadline was missed by six weeks.
Brito approached the challenges with the sort of clinical precision that has ensured his status as 3G Capital’s most favoured lieutenant. In his only public appearance in SA, the Brazilian-born media-shy executive participated in the traditional JSE listing ceremony in early January 2016. Just a month after President Jacob Zuma had dropped the "Nenegate" bomb on investors, Brito was telling the world how delighted AB InBev was to be listing in SA. He seemed untroubled by the elephant in the room, referring to his Brazilian roots helping him to understand emerging-market volatility.
Brito made the most of his brief visit, meeting every entity that could influence the outcome of the offer.
The irony of Brito being recipient of a newsmaker award is that little is actually known about the man outside his workaholic life as 3G Capital’s frontman for beer deals. We do, of course, know he eschews the trappings of the executive class — private jets, fancy hotels and large offices. And we know his favoured look is faux-casual, with chinos and open-necked shirt rather than suit. Dig a little deeper and you’re likely to discover little more than that he is married with four children.
The determination to avoid having a public persona may be part of the 3G culture and may have much to do with the 1999 attempted kidnapping of co-founder Jorge Paulo Lemann’s three young children.
"Brito and his 3G colleagues have worked so hard to develop an image of unassuming, down-to-earth individuals that you almost forget they are the cheerleaders of a killer form of turbocharged capitalism," said one 3G watcher, who added that Lemann or former SABMiller CEO Graham Mackay may have been more worthy recipients of the title given the more crucial role they played in ensuring the "Megabrew" deal happened.
After dominating the news pages for much of the year it may take some time to get used to hearing considerably less of SAB now that it is part of the powerful, media-shy AB InBev empire.
Asked for comment from Brito, AB InBev sent the following statement, ostensibly from him: "We are proud of SAB’s history and presence in SA. They were key reasons to combine our companies. We look forward to continue brewing the country’s best beers, to invest locally, to partner with thousands of local business owners and farmers, and make a positive contribution to communities.
"While we are proud of the great products we produce and the joy they bring to people’s [lives], we are equally committed to working with others to tackle the harmful use of alcohol. We are as passionate about ensuring our beers are enjoyed responsibly as we are about brewing them."
In a business newsmaker list dominated by compulsive dealmakers, Shoprite CEO Whitey Basson stands out. His claim to fame is based on the development of a small Western Cape-based food retailer into the largest one in Africa. It helped to have done two major deals along the way — the acquisition of Checkers, followed by that of OK — but Shoprite’s success depended on management rather than acquisitions.
The dramatic (hardly unexpected, given his age) announcement at the group’s October 31 AGM that he is retiring made Basson a late contender for the title.
Christo Wiese, SA’s richest man, seems destined always to be among the contenders for top newsmaker. He is the country’s consummate dealmaker — and if he’s not doing deals he is skirting close to some or other controversy. This year was certain to be a big one for Wiese following his decision to list Steinhoff in Frankfurt. The listing triggered an acquisition spree across Europe and North America. The year ended with speculation that Shoprite would soon be folded into Steinhoff and the enlarged group then split into African and non-African operations. Inevitably as CEO of Steinhoff, the much lower-profiled Markus Jooste also made it onto the list of contenders.