The recommended acquisition of SABMiller (LSE: SAB) by Anheuser-Busch InBev has largely overshadowed the former’s interim report released on Thursday, but with the shares trading below the offer price of 4,400p per share, at 4,055p, some shareholders would seem to be dithering over whether to take the cash or go for the part-cash and part-share alternative that’s also on the table.
The first-half results underline just what a good company SABMiller is, and although reported revenue dropped 12%, a lot of that was due to unfavourable exchange rate and the firm reported a 5% rise in organic revenue at constant currency. Adjusted EPS on the same basis was up 5%, leading to a 9% hike in the interim dividend to 28.25 cents per share.
SABMiller’s expertise in developing markets, where it sees most of its annual growth, will make AB InBev a formidable proposition.
Engineering challenge
A third-quarter update from IMI (LSE: IMI) disappointed the markets, sending the engineering firm’s shares down 8% to 896p — the word “challenging” as early as the third sentence was probably enough for some to reach for the Sell button.
The problem is that reported revenues for the quarter were 7% down on the same period a year ago, and even when adverse exchange movements are factored in, there’s still a 5% drop in organic revenue — although the firm does expect its organic revenues and margins in the second half to come in ahead of the first half.
Forecasts had the shares on a P/E of 14.5, and a coming downgrade will likely be in proportion to the share price drop, so the multiple will probably remain steady. With dividend yields around 4% expected, the shares seem fairly priced, but no great bargain.
Pubs back on track?
Punch Taverns (LSE: PUB) revealed the latest progress in its restructuring along with reporting a full-year loss of £105m. The loss was largely down to a £166m charge to cover debt restructuring costs and falls in the value of its pub estate, but efforts to get the debt pile down are working — from around £2.3bn three years ago, this year saw a further drop of £513m to get the total down to £1.4bn.
And despite the statutory loss, Punch reported underlying EBITDA of £196m, albeit down from 2014’s £205m. With significant disposals now completed, the company told us it expects to get around 95% of its pub profits in the coming year from its core estate, up from 88% in 2014.
This progress is significant, but whether it makes Punch a good investment is hard to say in the absence of any real quantification of its future fundamentals.