Anheuser-Busch InBev has concurred the terms of its £71bn takeover of SABMiller, in an arrangement that will unite the world’s two biggest beer producers.
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SABMiller will sell its stake in the MillerCoors LLC JV to its partner Molson Coors, as well as well as the Miller portfolio outside the us for $12 billion.
By buying SABMiller, AB InBev would add Latin American markets such as Colombia and Peru and crucially enter Africa at a time when a few of its home markets such as the USA are weakening as drinkers shun mainstream lagers in favour of craft brews and cocktails.
Under the agreement, Molson Coors will acquire full ownership of the Miller brand portfolio outside of the USA and retain the rights to all of the brands now in the MillerCoors portfolio for the US market, including import brands such as Peroni and Pilsner Urquell.
Carlos Brito, chief executive of AB InBev, said the deal will build the world’s “truly first global brewer”.
AB InBev expects to cut cost by $1.4 billion after the takeover.
That’s particularly true in China, which is known to be tough in negotiations, and in South Africa, which has put the companies on notice that it will look at the deal’s impact on the overall economy. The agreement is expected to be announced Wednesday along with a formal pact between SABMiller and AB InBev.
There’s a share and cash alternative that values SABMiller’s shares at £41.85 a share, but that’s aimed at its two biggest institutional shareholders – Altria Group, the holding company for tobacco firm Philip Morris and the billionaire Santo Domingo family – who will get a few money for their SABMiller investments while also remaining shareholders in the enlarged group.
The main deal would create the world’s largest brewer, and the sale of the MillerCoors joint venture interest is seen as essential to help AB InBev win approval from USA regulators. AB InBev will eventually merge into Newco and it will hold the combined group. To make room for the takeover, SABMiller is to offer its 58% stake in its U.S. joint endeavor MillerCoors. For AB InBev CEO Brito, the combination would cap a US$90 billion dealmaking spree over the last decade, turning a regional brewer into the undisputed global leader.
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In today’s trading, SABMiller shares were up 1.5 percent at 4,036.00p, as of 08:16 GMT.
