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Cape Town – Absent of any transaction, SABMiller’s [JSE:SAB] ratings are likely to remain unchanged unless the company adopts a more aggressive financial policy to defend its current ownership structure, Moody’s said on Friday.
While SABMiller rejected Anheuser-Busch InBev’s (ABI) third takeover offer of £42.15 (R863.83) per share this week, it is facing pressure from a major shareholder to take the offer.
Aiming to cut costs to rally its shareholder, SABMiller said on Friday it would have annual savings by March 2016 in excess of R5.7bn and reach R13.95bn by 2020.
Paolo Leschiutta, senior credit officer at Moody’s and lead analyst for SABMiller, told Fin24 on Friday that at this stage, SABMiller’s ratings remain unchanged as no new offer is on the table.
SABMiller said the latest proposal “substantially undervalues SABMiller, its unique and unmatched footprint, and its standalone prospects”.
If a deal occurs, the impact on SAB’s rating will ultimately depend on a range of drivers including the combined entity’s final financial leverage on an ongoing basis, said Leschiutta.
“It is difficult to assess today what the impact of an acquisition might be on SAB’s ratings as there are a number of uncertainties,” he said.
“If an offer is made and accepted and a deal goes through, the impact on SAB ratings will depend among other things on the final financial leverage of the combined group and its commitment and capability to reduced leverage over the following years.
“The ratings will also depend on our assessment of the combined entity business profile and potential integration challenges.
“Other important considerations from a credit perspective will be the provision of guarantees by ABI on SAB exiting debt, whether SAB will be fully consolidated in ABI or whether ABI’s increased leverage exerts pressure on SAB.
“Absent of any transaction, SAB ratings are likely to remain unchanged unless the company adopted a more aggressive financial policy to defend its current ownership structure.”
WATCH: Calling time on the SABMiller party?
