Brazilian rumours of 3G bid send Diageo shares up seven per cent
SHARES in listed beverage giant Diageo shot up seven per cent yesterday amid persistent speculation the firm was a takeover target for Brazil’s richest man.
Rumours of a possible bid by the billionaire Jorge Paulo Lemann, through his investment firm 3G Capital Partners, were sparked by a small article in Brazil’s Veja magazine on Friday. Shares in the company remained at elevated levels during the day, closing up 6.79 per cent, despite no disclosure from 3G confirming the rumours to be true.
A full takeover of Diageo would cost the Brazilian firm around £48bn, double the equity of the biggest leveraged buyout in history which was TXU in 2007 at £21bn. While Analysts at Numis described this scenario as unlikely, they pointed out 3G could decide to take a smaller stake through Anheuser-Busch InBev, in which the company retains a large stake.
But the large sum is not the only thing which could dampen speculation – with 3G managing a mega merger between Kraft Foods and Heinz, the firm already has a lot on its plate. In addition, Veja magazine has a chequered history when it comes to speculation. Last November it suggested 3G was planning a bid for Coca-Cola – a rumour which proved false.