The Belgian brewing firm has now either got shot of all the assets it agreed to sell in order to get the authorities to agree to its takeover of rival SABMiller, or it has agreed the sales.
“The remaining SABMiller stub has higher margins than ABInBev, putting into question some of the synergy targets released before ABInBev even received the keys,” according to the Deutsche team.
AB InBev is targeting US$1.9bn of cost synergies following the takeover.
“Having ultimately paid a 28x EV/EBITDA [enterprise value/underlying earnings] multiple for what remains of SABMiller, the usual plan is for cost cutting and ‘dream’ incentives to get the troops into line. Looking at the numbers and the company actions thus far, we remain skeptical,” Deutsche said.
What Deutsche called the “bevy” of consultants used in previous AB InBev deals have set bold key performance indicators, but in the German bank’s view with few guide rails to ensure sustainability beyond year one.
“Despite contrary multiple pronouncements by the company, Africa is not Brazil, nor Mexico. It’s a continent, not a country; unlike the Anheuser-Busch and Modelo deals, we question the applicability of the single market organizational model,” the bank revealed.
There also looks to be little incentive for those former SABMiller employees with the knowledge to stick around and execute.
According to Deutsche, permanent roles, continuity contracts and the like have been offered, but competitors, both globally and locally, have picked off the talent, both in beer and spirits.
The bank rates the shares as no more than a ‘hold’.