SABMiller will sell its 58% stake in U.S. joint venture MillerCoors to Molson Coors for £8bn, to allay competition concerns in the US.
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AB InBev expects to cut cost by $1.4 billion after the takeover.
Beer giant Anheuser-Busch InBev SA/NV (BUD,AHBIF.PK) Wednesday formalized the offer to acquire SABMiller plc (SBMRY.PK,SAB.L) in a deal worth 71 billion pounds or about $107 billion.
The merger will combine AB InBev’s Budweiser, Stella Artois and Corona brands with SABMiller’s Peroni, Grolsch and Pilsner Urquell and brew nearly a third of the world’s beer, dwarfing rivals Heineken and Carlsberg. The agreement marks the world’s third biggest takeover in corporate history, according to financial information provider Dealogic, and is also the largest ever takeover of a British company. In terms of consumer goods, the acquisition would push the company to annual revenues of $64 billion, overtaking Nestlé (VTX:NESN) as the biggest profit generator in the sector. InBev and Anheuser-Busch became AB InBev in 2008.
SABMiller, the world’s second-largest brewer by volume, had initially resisted the takeover approaches made by AB InBev, but eventually agreed to go into talks after the world’s largest brewer raised its offer and it was backed by key SABMiller shareholders.
With SABMiller’s sale of its stake in MillerCoors to Denver-based Molson Coors for $12 billion, Miller Lite won’t be owned by the same company as Bud Light and Budweiser.
Belgium-based AB InBev said it is also selling the Miller global business. “We continue to work constructively with the parties toward closing, and we look forward to working with the AB InBev management team at the new, combined company”. Alan Clark, chief executive of SABMiller said: “The SABMiller story is a simply fantastic achievement, and everyone who has been a part of it should feel immensely proud of the value they have helped create”.
He added: “It has always been our dream to build the best beer company bringing people together for a better world and we believe this combination represents a step change for our business and our journey towards that goal”.
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Analysts at Citi argued at the time that the massive merger could create massive synergies and could be approximately 13 percent accretive to InBev’s earnings per share in year three.
