Colombia family has power to ruin deal

ONCE AGAIN, Colombia’s richest family is standing between South America’s biggest billionaire and his plans for expanding his brewing empire.

With a 14 percent stake in SABMiller and two seats on the board, the Santo Domingos have the power to thwart Brazil’s Jorge Paulo Lemann, a cofounder of the buyout firm 3G Capital and a top shareholder in AnheuserBusch (AB) InBev.

The maker of Budweiser made an offer of about $100 billion (R1.345 trillion) for SABMiller with a two-tier proposal that would pay £37.49 (R770.65) a share in cash and stock for the two largest shareholders’ stakes. Altria Group, which has the most, urged the company to consider the proposal, but AB InBev said the Santo Domingos, the next-largest holder, did not give their support.

If the companies could ever reach an agreement, the family, whose interests are managed by Alejandro Santo Domingo and Lemann would “form the most important alliance in the merger,” said Andres Jimenez, a Colombian investor. Both AB Inbev and SABMiller get about a third of their revenue from Latin America.

The South American beer barons have been here before. In the mid-90s, Lemann, who owned the regional brewing powerhouse Brahma, made an offer to buy the Santo Domingo’s brewery in Colombia, called Bavaria. Violy McCausland-Seve, a New York investment banker who was born in Barranquilla, where the family has roots, said she had advised them to say no. She said the price – which she would not disclose – did not value the quality of the management and uniqueness of a family-owned company with no succession issues.

Lemann made another try in 2000. Alejandro Santo Domingo was working at Violy, Byorum & Partners, a boutique mergers and acquisitions firm McCausland-Seve founded, when Lemann made the second overture at a meeting in Paris, and the answer was the same. The family decided to continue with their consolidation strategy, buying up breweries in Panama, Peru and Portugal. In 2005, the clan sold its stake in Bavaria to SABMiller.

By then, Lemann had folded Brahma into Belgium’s Interbrew. Lemann controls South America’s largest fortune, which is valued at $24.9bn, according to the Bloomberg Billionaires index. In second place: the Santo Domingos, with $14.8bn. Their fortune has swelled by more than $2bn in recent months as SABMiller’s stock has risen on AB InBev’s interest in a deal. – Bloomberg