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EDITIONS
Thursday, 11 July, 2002, 08:58 GMT 09:58 UK
Brewing giant abandons share plans
Castle customers
SAB brands include Castle
The wave of stock market storms has prompted brewing giant SABMiller to ditch a cash-raising share issue - hours after it was announced.

"In light of prevailing market conditions, SABMiller has decided, in the best interests of its shareholders and the company, not to proceed with the proposed placing of ordinary shares," the firm said on Thursday.

The decision came less than 24 hours after the 120 million-share issue was announced, and followed a dismal day's trading for stocks worldwide.

London's benchmark FTSE 100 share index fell 122 points on Wednesday, with SABMiller's own shares slipping 5%.

But while the index lost a further 80 points in early trade on Thursday, SAB's move supported the price of shares in the South African-US brewer, which were at 0800 GMT one of only three in the FTSE 100 showing a gain.

War chest

SAB had proposed the share issue as a way of raising cash so that it would be ready for any takeover opportunities in the brewing sector.

"This [financial] flexibility is important to allow SABMiller to maximise shareholder value through its strategy, which includes seeking opportunities to enhance its position as a global brewer," the firm said on Wednesday.

SABMiller was itself formed in May by the $5.6bn purchase by South African Breweries, owner of brands including Castle, Lion and Pilsner Urquell, of Milwaukee-based Miller.

But SAB admitted that, amid the stock market turmoil, the share issue had prompted little initial interest from gloom-beset investors.

"It appeared to us against this background that there wasn't the level of support to proceed with the placing," an SABMiller spokesman said.

Flotation plans sunk

SAB's move will further dishearten City corporate financiers, who have already this week swallowed the decision by Irish snacks giant Cantrell & Cochrane to pull its 700m stock market flotation.

Last week Yellow Pages business Yell and DIY giant Focus Wickes shelved their launch plans.

But fashion house Burberry has ploughed on with its flotation, with shares set to make their market debut on Friday.

See also:

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