UK: SABMiller agrees $46m African joint ventures
The world's second largest brewer SABMiller plc said today that it has agreed two separate joint ventures with its pan-African partner the Castel Group in the French speaking territories of Algeria and Morocco, for a total of US$46m.
The Algerian joint venture has been effected by SABMiller acquiring a 25% direct interest in two Castel carbonated soft drink plants and one brewery in Algeria, together with a 15.78% stake in a second brewery, in which Castel is a majority shareholder.
The Moroccan joint venture has been effected by SABMiller acquiring a 25% interest in a holding company which has controlling interests in three breweries, a malting plant and a wet depot in Morocco.
SABMiller's direct investment in the joint venture businesses comprises US$25m in the Algerian joint venture and US$21m in the Moroccan joint venture
As a consequence of these investments by SABMiller and its existing 20% stake in Castel's operations in Africa, these joint ventures are effectively owned 60% by Castel and 40% by SABMiller.
The day-to-day operations of the joint ventures will be managed by Castel, but a statement said the parties will co-operate in a number of important areas such as procurement and new technical initiatives, whilst drawing on the resources of the respective groups.
In the year ended 31 December 2003 the joint venture businesses included across the two deals generated sales of US$86m, comprising 1.2m hectolitres of lager beer and 900,000 hl of carbonated soft drinks, SABMiller said.
The initial impact of the transaction on SABMiller's earnings and gearing is expected to be neutral.
Graham Mackay, chief executive of SABMiller, said: "We are delighted to have the opportunity of cementing our strong relationship with the Castel Group of France through the establishment of the Algerian and Moroccan joint ventures. The pan-African strategic alliance between our groups has progressed from strength to strength, and the underlying operations have performed admirably in often challenging conditions."
Pierre Castel, chairman of the Castel Group, said: "It was always the parties' intention to enter into joint ventures where new opportunities could be exploited, and certain opportunities were earmarked at the time the strategic alliance was formed. We are pleased that SABMiller will join us in the development of these businesses which have significant potential, and also look forward to other joint ventures with SABMiller in Africa."
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