Budweiser brewer Anheuser-Busch InBev said it will sell off SABMiller’s USA joint venture as it agreed the final terms of its £71 billion mammoth takeover of the London-listed beer giant.
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As part of that deal, SABMiller has agreed to sell its 58 percent share in the MillerCoors LLC joint venture to its partner, Molson Coors Brewing Co., which holds the remaining stake, as well as the Miller portfolio outside the USA for $12 billion. The deal includes rights to the Miller brand name and gives Molson Coors full control of operations.
While the MillerCoors stake sale is aimed at satisfying United States regulators, it remains to be seen whether the new company will have to divest SABMiller’s 49 per cent stake in CR Snow, the largest brewer in China, where AB InBev already has about 14 per cent of the market.
“By pooling our resources we would build one of the world’s leading consumer-products companies”, said AB InBev Chief Executive Carlos Brito.
The combined company expects to have a primary listing of its shares in Belgium, where Anheuser-Busch InBev is based, and secondary listings in Mexico, South Africa and the United States.
AB InBev will pay £44 per share for SABMiller, up from its initial offer of £38 made privately in September.
AB InBev is seeking to bolster growth by acquiring SABMiller’s businesses in Africa and Asia as changing tastes and the growth of craft beers cut sales in developed markets. AB Inbev’s shares rose 0.8 per cent in Brussels.
AB InBev and SABMiller own hundreds of brands, including Budweiser, Corona, Grolsch, Stella Artois and Labatt, a formerly independent Canadian company.
The deal is expected to go through in the second half of 2016, if it is accepted by investors and cleared by regulators and shareholders.
SABMiller’s board provisionally accepted the takeover last month.
The deal gives the new company 29 percent of the 198 billion liter global beer market – and makes it three times bigger than its nearest rival, Heineken, with a mere 9 percent, said Jeremy Cunnington, the senior alcoholic drinks analyst at Euromonitor worldwide.
Anheuser-Busch InBev said that it expected to achieve about $1.4 billion in annual cost savings by the end of the fourth year after the deal’s completion. “Research shows the less players there are in a particular market, the higher profit, and I think that’s where AB InBev and SABMiller are going with this”.
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But size alone won’t help the beer behemoths as they become bigger still.
