To ease concerns SABMiller might sell fifty eight percent of its stake in a venture with brewer Molson Coors for around $12 billion.
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AB InBev expects to cut cost by $1.4 billion after the takeover.
The deal is being backed by a record US$75 billion syndicated loan, which is the largest commercial loan in the history of the global loan markets.
The blockbuster transaction, worth the equivalent of 112 billion euros including debt, will bring together InBev’s top lagers like Beck’s, Budweiser and Stella Artois, with SABMiller brands Foster’s, Grolsch and Peroni.
“There may be a few complications in South America and Mexico, where 80% of AB InBev’s trade lies, and there’s also a substantial amount of SABMiller trade there too”, Colley said. Last year, AB InBev produced a total of 458.8 million hectolitres, with SABMiller trailing with 245.8 million hectolitres, and Heineken placing third with a production volume of 181.3 million hectolitres.
“This combination would create the first truly global brewer”, AB InBev Ceo Carlos Brito told reporters in a conference call after the deal, which is set to be completed next year.
As well as being conditional on the successful completion of the AB InBev and SABMiller deal, this buyout will also be subject the customary regulatory approvals in the US. The takeover would more than double Molson Coors’ revenue, which was $4.15 billion previous year, and add $1 billion in earnings before interest, taxes, depreciation and amortization.
A few industry experts believe the liquidation of its stake in MillerCoors will help with regulators, but feel there could still be obstacles with regulators to finish the deal. The concern is that the combined company will wield too much power in key markets, resulting in higher beer prices for consumers.
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On Tuesday, Labatt announced a US$350-million deal with the Mark Anthony Group to buy the Canadian rights to Mike’s Hard Lemonade, Okanagan Cider and ownership of the Turning Point Brewery in British Columbia, which brews Stanley Park beers. The company is listed in Brussels and NY. The closing of the transaction will make Molson second largest brewer in the USA, with a 25% market share second only to AB InBev’s 45% share.
