Anheuser-Busch InBev owns more than 40 major beer brands sold in the United States, including Bud Light, Budweiser, Stella Artois and Beck’s while London-headquartered SABMiller operates in the USA through its 58% ownership interest in the MillerCoors joint venture, according to the DOJ. IBISWorld estimates that the two multinational beverage companies now represent a combined 27.7 percent of the Global Beer Manufacturing industry’s revenue, posing a dominant presence that had antitrust regulators concerned about the proposed merger’s threat to regular market competition. AB InBev also owns Corona, Stella Artois and Beck’s.
Advertisement
As it struggles for growth in saturated markets such as the U.S., AB InBev is looking for growth into regions such as Africa, where SABMiller has a major presence. Earlier this year, SABMiller agreed the sale of the brand, along with Grolsch and London craft brewer Meantime, to Japan’s Asahi to appease regulator concerns over the AB InBev deal.
If approved by worldwide regulatory bodies, the deal is expected to close in the second half of 2016 and would create the world’s largest beverage company with combined revenues of approximately $73.5 billion globally. AB InBev will also have to curb its use of incentive programs to limit competition. Shares of AB InBev (BUD) closed Wednesday at $126.22, up 1.3%; SABMiller (SBMRY) up 0.4% to $58.46.
“Right now, they are about 45-percent in the U.S.in terms of sales”.
The Justice Department’s antitrust division is expected to announce a settlement agreement Wednesday approving the merger, Bloomberg reported citing persons close to the matter. She has been tracking AB InBev-SABMiller, but more closely follows MolsonCoors.
“Moreover, the settlement precludes ABI from acquiring beer distributors or brewers – including non-HSR reportable craft brewer acquisitions – without allowing for department review of the acquisition’s likely competitive effects”.
But American beer drinkers got over it. Brand loyalty to Busch beers is pretty strong, and the label for the most part remains the same. However, some shareholders are said to be unhappy with the proposed £44 per share proposed price, which could slow the deal down.
“As AB InBev’s total outlay was $106 billion for SAB Miller this means they have paid $86 billion for the positions in the growth markets of Africa and Central and South America”, said John Colley, professor of practice in the strategy and global business group at Warwick Business School.
Advertisement
SAB’s AGM could see some shareholders speak out against the takeover, which is the biggest deal in British corporate history, amid growing anger that the terms increasingly favour the FTSE 100 brewer’s two biggest shareholders, tobacco firm Altria and the Colombia’s Santo Domingo family.
