The London-based SABMiller, the world No 2 and maker of more than 200 beers including Peroni, Grolsch and Pilsner Urquell, said on Wednesday that it had been informed that AB InBev intended to make an offer which it would have to do by October 14 under United Kingdom rules. Any takeover would need to be approved by the regulatory authorities.
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Banks are willing to offer more than $50 billion of debt for the acquisition, one of the people said.
Eddy Hargreaves at Canaccord Genuity points to AB InBev’s stronger management and the possibility of up to $3.5bn of savings, as well as a healthy premium, to satisfy SABMiller’s shareholders.
The beer industry has used consolidation to stave off a slowdown in more established markets such as Europe and the USA , where drinkers are swapping to craft brews and wine and spirits, or merely drinking less. AB InBev, which has Budweiser, Stella Artois and Corona, rose as much as 12 per cent.
Finnie, who directed market analysis and strategy at the former Anheuser-Busch from 1965 through 1991, also said if the proposed merger goes through, SABMiller can expect the very large cost reductions Anheuser-Busch experienced after the InBev takeover.
“The real attraction is Africa, where AB InBev has no presence, as well as some add-ons in Asia and Latin America”, he said.
Weakening economies in Brazil and China, two of the growth engines for brewers in recent years, may have hastened AB InBev’s approach, according to Colbert.
Anheuser-Busch InBev has approached its rival SABMiller about a merger, Reuters reports. However, both companies’ share price jumped shortly after the news, which comes as no surprise considering the merged company would hold the majority of market share.
AB InBev, the world’s biggest brewer by volume, has been interested in making a bid for SABMiller – the world number two – for a while.
If SABMiller chooses not be bought it could seek a combination with another brewer. In addition to consolidating with other mass producers, companies like AB InBev have also begun to buy out craft breweries and leverage their ties with beer distributors to bring those products to a mass market.
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“We think that anti-trust regulators would come in and say that SABMiller would have to divest their stake in the MillerCoors joint venture”, says Weissman.
