Having raised a few eyebrows with its pursuit of Foster's Group, SABMiller has won back a few cheerleaders by signing a strategic alliance with Anadolu Efes. Chris Mercer looks at the market reaction to the deal.

Like waking from a torrid dream to find birds chirping in the morning sun, SABMiller's investors and observers seem suddenly more at peace with the world. Of course, the Foster's deal did happen, and it may not prove as bad as initially thought. But, there is a sense of relief that the Peroni brewer has returned to its 'bread and butter'. Investors, like journalists, are fond of 'stories' and SABMiller's story is all about emerging markets.

SABMiller's strategic alliance with Anadolu Efes, which will see it hand over beer operations in Russia and Ukraine to Efes in return for a 24% stake in the Turkey-based group, has received universal praise. Is this why SABMiller's CEO, Graham Mackay, held talks with Foster's in Istanbul? Perhaps a case of two birds, one stone.

Together, SABMiller and Efes' combined business in Russia will overtake Anheuser-Busch InBev to become the country's second largest brewer behind Carlsberg. Meanwhile, SABMiller gets better access to Turkey and a whole host of former Soviet markets.

Picking up this thread, Morningstar analysts said: "Given the long-term favorable demographics, GDP growth, and beer growth trends in Turkey, the CIS, and the Middle East, we foresee that this strategic alliance has ample runway to grow its business during the next decade." Anadolu Efes has an iron-like grip on Turkey's beer market, with an 89% volume share.

Turkey is whetting the appetite of many a drinks company in 2011, as witnessed by Diageo's deal to acquire the country's largest spirits producer, Mey Icki. While beer sales in Turkey are set to slip in volume terms in 2011 and alcohol is political rocket fuel in a predominantly Muslim nation, analysts believe the longer-term prospects are frothy with potential.

JP Morgan analysts said this week: "Post a low single-digit decline in 2011, we expect the Turkish beer market to grow mid-single-digit in the medium-term as a result of rising disposable income, positive demographics, changing societal attitudes [and] growing tourism, as well as product and package innovation."    

That said, isn't a significant advantage of the tie-up that SABMiller reduces its exposure to Russia's topsy-turvy beer market? Writing in the Financial Times, Daniel Dombey said: "The $1.9bn transaction with SABMiller may not be so much about growth in Turkey as consolidation in Russia.

Russia's stumbling economy in 2009 fed into a three-fold hike in beer tax last year and, with beer sales struggling to recover ground this year, further regulation for brewers is on the horizon in 2012. A bigger unit may more easily withstand such pressures.

It could also provide a new competitor to Carlsberg's Baltika Breweries both in Russia and in neighbouring markets, where Baltika is increasingly looking for growth. MF Global analysts view the SABMiller-Efes deal as a negative for Carlsberg, even though Baltika has a 40% volume share of beer sales in Russia. 

SABMiller and Efes combined have 18% of Russia's beer market, but their operations should fit together well and the groups expect at least $120m in annual synergies. "We perceive the operations to be very complementary in both geography and price architecture (SAB more high-end, Efes more low-end)," said analyst group Sanford Bernstein.

At the bottom line, many analysts do not expect the strategic alliance to be an immediate pot of gold for SAB's profits. "The deal is modestly earnings enhancing and modestly increases the proportion of profits from high growth emerging markets," said Bernstein.

SABMiller's share price has not moved significantly following the deal, although has performed slightly ahead of the FTSE100. At the same time, there is some concern about the group's weak beer sales in Eastern Europe and in North America, despite a 3% rise in overall group volume sales for the six months to the end of September.

It is, however, the longer-term potential of the Efes deal that has captured the imagination of observers. The Telegraph's Jonathan Sibun said that, with FTSE companies often accused of thinking too short-term, "SABMiller’s tie-up with Turkish brewer Andolu Efes should provide a refreshing antitote to that view".

Notably, SABMiller will get first refusal should Anadolu Efes' ruling family shareholders decide to sell up. As Bernstein said, the Peroni brewer has acquired "a valuable long-term option in one of the largest remaining emerging market brewers".

What of the rumours that just won't die regarding a takeover of SABMiller by A-B InBev? Has the transaction made something that isn't likely to happen in the near-term a bit less likely to happen at all? It's probably business as usual in my view. A-B InBev is not big in Turkey, while it is not inconceivable that Russian authorities would allow a combined A-B InBev-SABMiller-Efes entity to exist as a competitor to Baltika. According to Bernstein, there isn't thought to be a change-of-control clause in the SABMiller-Efes tie-up, which means that SABMiller's 24% stake would, in theory, pass directly to A-B InBev.

Feeling suitably indulged? Overall, I like the Wall Street Journal's synopsis of the SABMiller-Efes alliance as a "tidy deal" done at a decent price. It might also steady some nerves regarding Foster's.