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London - French drinks group Castel ruled out selling its African beer business to SABMiller [JSE:SAB] by denying it was in sale talks on Thursday, but its logic is compelling if the owners wants to sell, say analysts.
The Paris-based group was quick to deny a media report in the Times newspaper that it was in talks about a deal worth over £6bn pounds ($9.56bn) with the world's second-biggest brewer linking their African beer operations. The Times report followed a broker's note highlighting a possible deal.
"It's wrong... You are mixing it up with a study by Deutsche Bank. There are no negotiations, nothing," Guy de Clercq, director of BGI Castel, the beer and soft drinks subsidiary of the privately owned drinks group, told Reuters in Paris.
The Deutsche Bank report on Wednesday said Castel was a natural target for SABMiller's mergers and acquisitions ambitions, and a more compelling option than acquiring the Foster's Group beer business in Australia.
The report, dated October 6, said Castel's beer business could transform Africa into a truly significant growth driver for SABMiller if the French group's controlling family were ever to put it up for sale.
Shares in SABMiller, which brews Peroni, Miller Lite and Grolsch beers, rose 0.3% to £19.98 by 11:53 in a flat London stock market.
Castel was founded in 1949 by nine brothers and sisters and is still run by its 84-year-old founding president, Pierre Castel. Despite his reduced involvement there has been no indication that the controlling family might sell.
Analysts said a Castel link-up would make strategic sense with SABMiller strong in southern and eastern Africa countries such as Tanzania, Zimbabwe and Mozambique, and Castel in western Africa nations like Angola, Cameroon and Ivory Coast.
"An acquisition of Castel would be an excellent strategic move for SABMiller, given the high margins and strong per capita beer consumption growth in Africa. SABMiller would eclipse Heineken and Diageo in Africa," said analyst Simon Hales at broker Evolution Securities.
SABMiller has long been seen as an eventual acquirer of Castel when Pierre Castel relinquishes control. Indeed, SABMiller has the right of first refusal if the business is sold, Hales added.
The two reached a strategic alliance in 2001 whereby SABMiller took a 20% stake in the French group's beer and soft drinks operations in Africa and Castel acquired a 38% stake of SABMiller's African subsidiary.
The global brewing industry has seen a number of big deals in recent years. Belgium's InBev acquired St. Louis-based Anheuser-Busch in 2008, creating the world's biggest brewer AB InBev with brands including Stella Artois, Beck's and Bud Light.
The Paris-based group was quick to deny a media report in the Times newspaper that it was in talks about a deal worth over £6bn pounds ($9.56bn) with the world's second-biggest brewer linking their African beer operations. The Times report followed a broker's note highlighting a possible deal.
"It's wrong... You are mixing it up with a study by Deutsche Bank. There are no negotiations, nothing," Guy de Clercq, director of BGI Castel, the beer and soft drinks subsidiary of the privately owned drinks group, told Reuters in Paris.
The Deutsche Bank report on Wednesday said Castel was a natural target for SABMiller's mergers and acquisitions ambitions, and a more compelling option than acquiring the Foster's Group beer business in Australia.
The report, dated October 6, said Castel's beer business could transform Africa into a truly significant growth driver for SABMiller if the French group's controlling family were ever to put it up for sale.
Shares in SABMiller, which brews Peroni, Miller Lite and Grolsch beers, rose 0.3% to £19.98 by 11:53 in a flat London stock market.
Castel was founded in 1949 by nine brothers and sisters and is still run by its 84-year-old founding president, Pierre Castel. Despite his reduced involvement there has been no indication that the controlling family might sell.
Analysts said a Castel link-up would make strategic sense with SABMiller strong in southern and eastern Africa countries such as Tanzania, Zimbabwe and Mozambique, and Castel in western Africa nations like Angola, Cameroon and Ivory Coast.
"An acquisition of Castel would be an excellent strategic move for SABMiller, given the high margins and strong per capita beer consumption growth in Africa. SABMiller would eclipse Heineken and Diageo in Africa," said analyst Simon Hales at broker Evolution Securities.
SABMiller has long been seen as an eventual acquirer of Castel when Pierre Castel relinquishes control. Indeed, SABMiller has the right of first refusal if the business is sold, Hales added.
The two reached a strategic alliance in 2001 whereby SABMiller took a 20% stake in the French group's beer and soft drinks operations in Africa and Castel acquired a 38% stake of SABMiller's African subsidiary.
The global brewing industry has seen a number of big deals in recent years. Belgium's InBev acquired St. Louis-based Anheuser-Busch in 2008, creating the world's biggest brewer AB InBev with brands including Stella Artois, Beck's and Bud Light.
