Amidst A Beer Mega-Merger, A Colombian Family Becomes Pivotal

The financial world is abuzz with news that the world’s two largest breweries, SAB Miller and Anheuser-Busch InBev, have announced their intent to merge and create a US$ 270 billion behemoth. [Ed.: Are we really the first to market with the word ‘beer-hemoth’?] The merger’s success is far from certain, since it will undoubtedly face a grueling approval process with US antitrust regulators who are understandably wary of a tie-up between America’s two largest breweries, Anheuser-Busch and Miller).

However there is one Colombian family that is definitely raising glasses at the prospect of a successful M&A transaction. The Santo Domingo family, Colombia’s wealthiest, is SAB Miller’s second-largest shareholder with a 15% stake (US tobacco company Altria controls 27% of the British-South African company). Their success can be attributed to a combination of shrewd deal-making and exquisite timing. In 2005 they sold their 75 percent stake in Colombia’s largest brewery, Bavaria, to SAB Miller in return for stock – a move that ultimately added US$ 2.2 billion to their fortune. The family then spent the next decade diversifiying its investments outside of Latin America, thereby avoiding the economic implosion that has beset the region in recent years. As of today both the Brazilian real and Colombian peso have dropped more than any other emerging market currencies in the past twelve months (40% and 34% this year, respectively). Amidst a potentially unparalleled buying opportunity there, the Santo Domingo family’s next move will be worth watching.

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