Anheuser-Busch InBev NV on Wednesday said it had formally agreed to buy SABMiller PLC for approximately €98.7 billion.
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AB InBev will pay about $US67 per share, in cash, for most of SABMiller’s stock, though shareholders can also elect to receive alternative compensation involving a mix of cash and stock. The deal, which also includes rights to the Miller brand name worldwide, should ease concerns that AB InBev would have a stranglehold on the US market after the merger. Shares in SABMiller rose 2.8 percent on Wednesday on relief that the deal was eventually formalized.
Apart from Budweiser, the new entity will sell AB InBev’s Corona Lagers and Stella Artois beer brands, along with SABMiller’s Grolsch, Peroni and Pilsner Urquell.
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.
As part of the deal, SABMiller will divest its 58% stake in the MillerCoors joint venture to its partner Molson Coors, which owns the rest of the company, as well as the rest of the Miller portfolio outside of the US for $12 billion.
Belgian-Brazilian behemoth InBev is eager to tap into booming developing markets in Africa and China, where SABMiller’s joint venture produces Snow – the world’s best selling beer by volume.
He said the company would seek expeditious regulatory approval and hopes to close the deal in the second half of 2016. Although the discount of the PSA vs the cash offer has narrowed from 11% to 5%, we would expect most shareholders to accept cash, given that the restricted shares will be unlisted with a five-year lock-up.
Meanwhile, SABMiller’s “planned sale of the stake in MillerCoors is created to ‘promptly and proactively address regulatory considerations, ‘ the companies said”, Bloomberg’s Paul Jarvis and Thomas Buckley report.
Based on Tuesday’s closing share prices and current exchange rates, the offer is worth £70 billion, or $106 billion.
Cost-cutting following the deal will see support functions trimmed where they overlap, particularly in creating one corporate headquarters and overhauling regional head offices, AB InBev said.
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The size of AB InBev’s loan eclipses the previous record which was held by Verizon Communications (VZ.N), which raised a $61 billion bridge loan in 2013 to back its purchase of the remaining 45 percent stake in Verizon Wireless that it did not already own, according to Thomson Reuters LPC data.
