(FROM THE WALL STREET JOURNAL 10/9/15)
By Sara Schaefer Munoz in Bogota and Tripp Mickle in Atlanta
At the center of SABMiller PLC's efforts to get a better deal in
Anheuser-Busch InBev NV's takeover bid is a family whose
brinkmanship at the negotiating table helped make them Colombia's
richest.
For decades, the Santo Domingo family has controlled a web of
enterprises. Their sale of Colombian brewer Bavaria in 2005 to
SABMiller saw the clan's $2.2 billion fortune multiply many times
over. The family's holdings are now valued at $14.8 billion,
according to the Bloomberg Billionaire's Index.
Now the second-largest shareholders in SABMiller, with a 14%
stake and two board seats, the Santo Domingos, led by 38-year-old
Harvard-educated Alejandro Santo Domingo, are the linchpin InBev
needs on its side to ink the $99 billion proposed deal.
AB InBev Chief Executive Carlos Brito said during a media call
Wednesday he thought the family was receptive to the deal when the
company announced a takeover proposal for SABMiller earlier that
day.
He said the cash-and-stock portion of the AB InBev's proposal
"was designed with and for them," with the understanding that the
Santo Domingos would be on board.
Mr. Brito expressed surprise when the family later declined the
offer. "At this point, we don't have their support," he said.
Mr. Brito noted that a precondition of doing the deal was "an
irrevocable commitment" from both BevCo Ltd., the holding company
for the Santo Domingo family's SABMiller beer interests, and Altria
Group Inc., the tobacco company, which has a 27% stake in SABMiller
and three seats on the board. Altria said Wednesday it supported AB
InBev's proposal.
Alejandro Santo Domingo, reached by phone in New York, declined
to comment about the family's intentions.
Those who know the family say they have a knack for holding out
for the best outcome, with the hope of also keeping their influence
in a business they have been involved in for decades.
A banker whose firm has worked with the Santo Domingo family
said their refusal of the current bid "is a negotiating strategy.
They are calling the shots."
Rudolf Hommes, a former Colombian finance minister who knows the
family, described it as clan of deal makers who have historically
been able to adroitly multiply their wealth many times over.
Alejandro Santo Domingo's grandfather, Mario, had expanded his
fortune and left it for his son, Julio Mario Santo Domingo, Mr.
Hommes said.
Now, that fortune -- largely controlled by Alejandro Santo
Domingo, who succeeded his late father -- could mean an even
broader stake in a business that Mr. Hommes says the Santo Domingos
have long been passionate about: beer.
The younger Mr. Santo Domingo, a tall and dashing entrepreneur
who lives in New York and whose social life and recent engagement
to British aristocrat Lady Charlotte Wellesley is splashed on the
society pages here, shares his father's business acumen, say people
who know the family.
"I see that he's very capable," said Fabio Echeverri, former
president of ANDI, a group representing industrialists.
Mr. Santo Domingo's father had been known for turning down juicy
overtures. In 1996, Brazilian Jorge Paulo Lemann -- now a top
shareholder in AB InBev -- made a bid for the family's Bavaria
brewery, which the family rebuffed.
Violy McCausland-Seve, who advised the Santo Domingo family
until about a decade ago, said it rejected the offer because it
undervalued the company's potential -- given that its margins were
lower than comparable brewers. It opted to improve those, raising
them to 40% from 20%, and then it used its increased cash flow to
acquire brewers in Panama and Peru.
Ms. McCausland-Seve said the company ultimately sold to
SABMiller in 2005 because it recognized that the beer industry was
consolidating globally.
She said she didn't know how the family views the AB InBev
offer, but she noted that SABMiller was better-positioned for
growth in Latin America and Africa. "Turning it down would not be a
crazy decision," she said of AB InBev's overtures.
Julio Mario Santo Domingo, an imposing figure in Latin America's
world of business until his 2011 death, had his hands in an array
of sectors, from Colombian television to radio to tourism and the
country's main airline. He was also close to the country's
political elite. In the 1990s, he became a lightning rod for
criticism after publicly backing Colombia's then-President Ernesto
Samper, who was accused of taking campaign money from one of the
country's powerful drug cartels. Mr. Samper denied taking money
from traffickers, and was absolved in a congressional vote.
Critics said that the Santo Domingo family had their media
outlets go soft on the president, charges Julio Mario Santo Domingo
denied at the time.
When Bavaria merged with SABMiller in one of the continent's
biggest deals ever, it resulted in $3.5 billion worth of stock for
the Santo Domingos. The family was sharply criticized by some
members of the Colombian government and the public for successfully
arguing that the Bavaria-SABMiller deal was a merger, not a sale,
which enabled the family's to avoid paying millions of dollars in
taxes.
Since Julio Mario Santo Domingo's death, Alejandro has been in
control of a vast portfolio, along with his cousin, Carlos
Alejandro Perez Davila, a former Goldman Sachs Group Inc. banker.
Mr. Santo Domingo is also managing director of New York-based
venture-capital firm Quadrant Capital Advisors Inc.
Mr. Perez Davila declined to comment.
---
Daniela Ramirez contributed to this article.
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(END) Dow Jones Newswires
October 08, 2015 19:59 ET (23:59 GMT)
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