SABMiller raises cost savings targets

SABMiller, which rejected a third offer from Anheuser-Busch InBev this week, said on Friday that it has increased its annual run rate cost savings target.

The brewer, which rebuffed a £42.15 per share offer from its Belgium-based rival this week, has upped its cost savings target from $500m by March 31 2018 to at least $1.05m by 31 March 2020.

Chief executive Alan Clark said: “Our recent trading statement highlighted our accelerating growth in the second quarter. Another key plank of our strategy is to build a globally integrated organisation to optimise resource, win in market and reduce costs. The measures we are announcing today are a continuation of our existing cost saving programme.”

The company said that while it is already a highly-efficient business with EBITDA margins of 38% across its 20 largest managed beer markets, it is continuing to remove duplication across markets, bringing specialist expertise in areas like procurement under one roof, and standardising common processes.

It said this results in its markets being freed up to concentrate on “what they do best - growing revenue with local consumers and customers”.

Nomura said the increase in cost-cutting benefits announced on Friday could lead to a sweetened approach from AB InBev, which could in turn lead to SABMiller board engagement ahead of the put-up-or-shut-up deadline on 14 October.

Nomura kept its ‘buy’ rating on the stock, which it recommends owning given the likelihood of a deal.

At 1300 BST, SABMiller shares were up 1.1% at 3,681.50p.

On Thursday, AB InBev put out a statement urging SABMiller shareholders not to let the board thwart a takeover.

AB InBev’s chief executive Carlos Brito said: “Our proposal creates significant value for everybody. How long will it be before shareholders see a value of over £42 in the absence of an offer from AB InBev? If shareholders agree that we should be in proper discussions, they should voice their views and should not allow the board of SABMiller to frustrate this process and let this opportunity slip away.”