SABMiller shares have risen on Wednesday after it confirmed that it has reached a formal agreement to be acquired by larger brewing rival Anheuser-Busch InBev for £71 billion. “However, AB InBev’s offer represents an attractive premium and cash return for our shareholders, and secures earlier delivery of our long-term value potential”.
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Molson Coors acquisition is conditional on the closing of AB InBev’s acquisition of SABMiller and will be financed from cash flow, new debt and equity, with an expected financing split of 75 percent – 80 percent debt and 20 percent-25 percent equity.
“The transaction will be implemented by means of the acquisition of SABMiller by Newco (a Belgian company to be formed for the purposes of the transaction)”. The takeover would be the largest ever UK M&A transaction and one of the largest mergers in corporate history.
While the MillerCoors stake sale may satisfy USA regulators, it remains to be seen whether the new company will have to divest SABMiller’s 49 percent stake in CR Snow, China’s leading brewer, according to Plato.
Indeed, the combined entity will brew almost 30% of the world’s beer.
“Looking beyond the US, the combined company will extend the global reach of AB InBev’s iconic American brands, such as Budweiser, to more markets around the world”, the company wrote. In order to allay antitrust concerns in that deal, ABI agreed to sell the US rights to the Modelo range to Constellation Brands, including two of the USA market’s top 10 beer brands-Corona Extra and Modelo Especial.
The takeover, which SABMiller’s board provisionally accepted last month, would be the largest of a British-based company and the fourth-biggest overall of any corporation. This is driven by a few important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover.
AB Inbev still has to get the take over past the competition authorities.
Molson Coors would buy SABMiller’s 58% stake, said the person, who asked not to be identified because the agreement isn’t yet public. AB InBev says it will pay $106 billion for SABMiller, a bit more than originally offered (and then counteroffered).
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The takeover will allow Belgium’s ABInBev, which also makes Stella Artois, to tap into SABMiller’s strength in fast-growing African and Asian markets.
