Another question for the two beer companies will be how to handle distribution, as SABMiller now has a deal with Coca-Cola and AB InBev with PepsiCo.
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Any merged group may also have to sell interests in China, where SABMiller’s CR Snow joint venture with China Resources Enterprise (0291.HK) is the market leader. ABI’s shares in Brussels rose a more modest 2.4%. Combined, they own about 41 per cent of SABMiller’s outstanding shares.
MillerCoors has continually invested in its Milwaukee operations, Madrigrano said.
“I think they will hope to put prices up but the thing that makes it very hard for them is there’s very genuine competition from the niche brewers, western Europe and America”. A Heineken spokesman could not be immediately reached for comment.
The beer industry has been consolidating for the past decade as it seeks to gain more clout with suppliers, distributors and retailers in a market that’s seen overall slowing sales in the U.S.
The world No. 1, the daily notes, in the past tried but failed to acquire the Czech brewer Budějovický Budvar; most famously, the two firms have clashed for years in David vs Goliath legal battles over the use of the Budweiser name.
There are significant anti-trust hurdles to any combination, particularly in the United States, where the companies would have about 70 per cent of the beer market. That marked the first time that segment hit the double-digit mark. Fortress Investment Group (FIG) announced it will close its flagship Macro Hedge fund and return all capital to investors by the end of the year.
The repercussions on craft beer could be … well, meh. SABMiller has also tapped into the craft beer scene, buying one of the UK’s most successful independents, London’s Meantime Brewing Company.
Its previous offers were met with resistance.
Colley says to “expect substantial redundancies” over the coming year, potentially in head offices and country management teams.
“AB InBev has both a reputation and demonstrable track record for being able to effectively extract these savings”, Colley said. A-B InBev, which is based in Belgium, has roughly 155,000 workers around the world.
SABMiller, which had turned down AB InBev three times in the past month on the grounds that the deal being offered significantly undervalued the company, said that the board was prepared to unanimously recommend the offer to SAB shareholders.
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AB InBev, which has until October 28 to make the bid formal, undertook to pay a “break fee” of $3 billion if the deal falls through because of regulatory objections or a rejection by its own shareholders.
