LONDON — It is unusual to have the fate of a US$104 billion (S$147 billion) takeover campaign rest in the hands of one family. But in the case of SABMiller, its future lies in part with a wealthy Colombian clan that is one of its biggest shareholders.
That is the Santo Domingo family, whose immense wealth has been tied to the canny way it came to dominate that country’s beer market. And a shrewdly constructed deal to sell their company to SABMiller a decade ago has now given it an outsized role in determining whether Anheuser-Busch InBev’s (AB InBev’s) acquisition succeeds.
As of now, the family controls a roughly 14 per cent stake, putting it behind only tobacco giant Altria, which owns 27 per cent. The two have diverged in their responses to AB InBev’s latest takeover offer of £42.15 (S$91.36) a share. Altria has said that it is happy with the bid, but the Santo Domingos, who hold two seats on the SABMiller board, have sided with the company in fending off the bigger brewer’s advances.
AB InBev’s offer — in which 41 per cent of SABMiller’s shareholders could take special unlisted shares instead of cash, corresponding precisely with the combined stakes of Altria and the Santo Domingos — was crafted with an eye towards wooing those two. Both shareholders gained their stakes through stock swaps, potentially putting them at risk of huge tax bills if they sold for cash.
Over the decades the Santo Domingos have amassed billions of dollars and an outsized presence in Colombia. The family traces its rise to its patriarch, Julio Mario Santo Domingo, the son of a successful banker who parlayed his family’s connections into his own successes. (He died at 87 in 2011.) There was Caracol, the Colombian television network he controlled. Then there was El Espectador, Colombia’s oldest newspaper. And Avianca, an airline he sold to Brazilian entrepreneur German Efromovich.
But the crown jewel has always been Grupo Empresarial Bavaria, which became the second-biggest brewer in South America, dominating markets in Colombia, Peru and Ecuador. (A top rival was AmBev of Brazil, which went on to become a key part of what is now AB InBev.) “There are few countries in the world in which an individual came to have so many tentacles,” Semana, a Colombian magazine, once wrote of the elder Santo Domingo. He also served as Colombia’s first ambassador to China.
Bavaria’s imposing presence in the fast-growing South American market drew a battle between SABMiller and Heineken, culminating in SABMiller’s US$5.5 billion takeover of the Santo Domingo company in 2005. Unusually, the deal involved the European brewer paying cash to Bavaria’s minority shareholders — giving the family a US$3.5 billion stake that has since quadrupled in value.
But the future of the clan’s wealth likely lies with the two members who sit on the SABMiller board: the elder Santo Domingo’s son Alejandro and Carlos Prez Davila, Alejandro’s cousin. The family is drawing on advice from law firms in the United States and Britain as it weighs its options. But a person close to the SABMiller board insisted that for now, the clan is aligned with the company.
In an awkward moment, AB InBev first said on Wednesday it expected to gain the Santo Domingos’ support, only to concede later that it had not. But in a conference call, the brewer’s chief executive, Carlos Brito, acknowledged their importance. “There is no transaction without them,” he said. The New York Times