Even before the approach to SABMiller, it was clear that the Brazilian deal makers who helped put together Anheuser-Busch InBev had sprawling ambitions.
The men behind 3G Capital, the private equity
firm with origins in Brazil, have established themselves as the most
audacious deal makers of the last decade. Their motto, “dream big,” has
driven them to strike a series of mega-deals, moving into beer, packaged
foods and restaurants.
First,
they created the world’s largest brewer, using their Brazilian company
AmBev to merge with InterBrew of Belgium and then orchestrate a surprise
takeover of Anheuser Busch, the maker of Budweiser, in 2008. Since
then, Anheuser-Busch InBev has continued to swallow up smaller brewers
around the world.
In 2010, 3G Capital moved into the fast-food market, acquiring Burger King and taking the company private.
Brazilian Investor 3G Capital’s Big Food Deals
With deals involving Burger King, Kraft and the company
behind Budweiser, 3G Capital and one of its backers, Jorge Paulo Lemann,
have become powerhouses in the world of food brands.
Last
year, it was back to fast food. 3G Capital, again with the assistance
of Mr. Buffett, acquired the Canadian doughnut chain Tim Horton’s and
merged it with Burger King. The combined company, renamed Restaurant
Brands International, appears to be intended as a platform for yet more
acquisitions.
As
if all this were not enough, 3G and Mr. Buffett were at it once again
this year, using Heinz to acquire Kraft, the packaged foods giant. The
deal, worth more than $80 billion, was an indication that for 3G
Capital, big companies are never big enough.
Now,
3G Capital — whose five founding partners sit on the board of
Anheuser-Busch InBev — appears to be pursuing the deal many observers
said could never be done.
With
the approach to SAB Miller, 3G Capital appears to be betting that
antitrust regulators around the world will bless a merger of the world’s
two largest brewers. It is also betting that it can muster the
financial resources, and the focus from its partners, to execute what
would in some ways be the most audacious deal in its relatively short
history.
Should
3G Capital succeed, SAB Miller will probably be subject to the same
treatment as other companies under the Brazilian firm’s control.
Zero-based budgeting, a system that requires managers to justify all
expenses on an annual basis, is likely to be put into effect. Staff will
be purged. Any unnecessary expenses will be eliminated.
Though
this rapacious cost-cutting is just the sort of behavior that Mr.
Buffett says he abhors, 3G Capital appears to redeem itself in eyes of
the famous investor because it has shown no interest in selling its
investments for a quick buck.
Instead,
like Mr. Buffett himself, 3G Capital says it buys companies with the
aim of holding on to them for generations. To provide liquidity for
investors, some shares are taken public.
“3G aren’t buying things to sell,” Mr. Buffett said earlier this year. “The other private equity firms, they buy companies with the idea of I.P.O.-ing them or selling them to a competitor.”
It
remains unclear whether Mr. Buffett will be involved in any takeover of
SAB Miller by AB InBev, or whether the deal will ever get done.
What
is clear is that such a deal would be in line with 3G Capital’s big
dreams. Indeed, Jorge Paulo Lemann, one of 3G’s founding partners, has
understood the power of beer to mint fortunes for decades now.
“I was looking at Latin America and who was the richest guy in Venezuela? A brewer,” The Financial Times quoted Mr. Lemann as saying in 1989. “The richest guy in Colombia? A brewer. The richest in Argentina? A brewer.”
If
he and his partners succeed in taking over SAB Miller, Mr. Lemann,
already one of the richest men in the world, will become even richer.
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