Business Watch -- WSJ
June 06 2016 - 3:03AM
Dow Jones News
AB InBev
New Union Opposition To SABMiller Takeover
Anheuser-Busch InBev NV faces a new challenge from a key South
African union as it seeks approval for the acquisition of rival
brewer SABMiller PLC.
South Africa's Food and Allied Workers Union plans to object to
the merger at a hearing before the country's Competition Tribunal,
said Katishi Masemola, the union's general secretary.
The union opposes AB InBev's plan for handling a shareholder
program that SABMiller established for employees, retailers and
others in South Africa, he said. The union wants those shareholders
to be able to cash out their stake in the company when the deal
closes rather than wait until 2020 when their shares mature under
terms of the SABMiller shareholder program.
"We're planning for a long fight," Mr. Masemola said, adding
that the union would press its case for changes all the way to the
Competition Appeal Court if need be.
The union's objection creates a new obstacle to AB InBev's
effort to win over regulators in South Africa, one of four markets
where regulatory approval is a precondition to closing the roughly
$108 billion deal. AB InBev appeared on track for South African
approval when the country's Competition Commission recently signed
off on the deal. It now heads to South Africa's Competition
Tribunal for a hearing and final clearance.
The South Africa Competition Commission's approval came a little
over a month after AB InBev pledged to create a $69 million
investment fund in South Africa and promised that no employees in
the country would lose their jobs as a result of the merger.
--Tripp Mickle
SIGNET
Reports Question Credit; Shares Slide
Shares of Signet Jewelers Ltd. fell on Friday, pushing their
decline last week to 12%, amid reports that questioned the credit
quality of the company's customers and alleged that some Signet
employees had replaced premium diamonds with cheaper, man-made
substitutes.
In a statement Friday, the company said: "We strongly object to
recent allegations on social media...that our team members
systematically mishandle customers' jewelry repairs or engage in
'diamond swapping.' "
Signet owns some of the most prominent jewelry-store brands in
the U.S., including Jared, Kay Jewelers and Zales.
Like other sellers of big-ticket items, Signet often provides
financing for purchases its customers make.
After the stock market closed Wednesday, "Grant's Interest Rate
Observer, " an investment newsletter, issued a negative report on
Signet, saying its credit portfolio could be in worse shape than
thought because of the way the company accounts for loan
delinquencies and losses.
Shares of Signet declined 6.6% the day following the report.
Signet didn't immediately respond to a Wall Street Journal request
for comment about the credit-quality allegations, though Chief
Executive Mark Light on the company's recent earnings call said,
"our credit metrics and our credit portfolio are strong."
Citing Bloomberg data, the newsletter said the number of
bankruptcy filings that cited Signet's brands as a creditor had
jumped 72% in the first quarter from the same period a year
earlier.
Last week -- before the newsletter was released -- Signet had
said it would undergo a "strategic evaluation" of its credit
portfolio and would consider a "full range" of possible outcomes,
including potentially outsourcing its credit program. The company
said it had tapped Goldman Sachs as an adviser, though it noted its
credit metrics in the latest quarter had improved. Alongside that
disclosure, the company also reported downbeat comparable-store
sales growth.
Shares of Signet closed down about 4.4% at $88.19 in New York on
Friday.
--Austen Hufford
(END) Dow Jones Newswires
June 06, 2016 02:48 ET (06:48 GMT)
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