AB InBev will not takeover SABMiller’s USA business, but will sell SABMiller’s Miller Global Brand Business and Miller Coors division to Molson Coors for $12 billion.
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If given the green light, the tie-up would see the enlarged group own a stable of a few of the best-known beer brands, including AB InBev’s Budweiser, Corona and Stella Artois together with SABMiller’s Grolsch and Peroni.
Carlos Brito, the chief executive of AB InBev, said: “Our combination with SABMiller is about creating the first truly global beer company and bringing more choices to beer drinkers in markets outside of the U.S.”.
“SABMiller has an unmatched footprint in fast-growing developing markets, underpinned by our portfolio of iconic national and global brands”, said SABMiller chairman Jan du Plessis in a statement.
Molson Coors CEO Mark Hunter called the deal “a game-changing opportunity for Molson Coors”, reports the Wall Street Journal’s Saabira Chaudhuri, who points out that MillerCoors previous year generated $7.85 billion in sales, almost double Molson Coors’s net sales of $4.15 billion. The sale also includes the global Miller brand, now sold in over 25 countries (including Canada, Colombia, Czech Republic, Ecuador, Mexico, Panama, Romania, Russia, South Africa and the United Kingdom), as well as related trademarks and other intellectual property rights.
InBev’s acquisition of rival SABMiller for more than $100 billion will prove to be one of the largest acquisitions in corporate history.
AB InBev will pay £44 for each share in SABMiller. Though AB InBev got SABMiller’s main shareholders on board and lined up the largest-ever acquisition debt package, Erik Gordon of the Ross School of Business at the University of MI said the deal faces regulatory risks.
Much of the deal’s financial contribution is tied to US$250 million in tax benefits over 15 years and at least US$200 million in annual cost savings, although analysts expect cost savings could reach US$300 million to US$400 million.
The financing has been agreed with AB InBev’s key relationship banks, including Banco Santander, Bank of America Merrill Lynch, Bank of Tokyo-Mitsubishi UFJ, Barclays, BNP Paribas and Deutsche Bank. (MillerCoors is a joint venture between the two companies; SABMiller currently controls 58% of it.) That’s good news for Molson Coors, which in terms of size will now trail only AB InBev in the U.S.
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“If anything, there will be more of this craft style innovation as this megabrewer tries to replicate what the craft brewers have done”, he said.
