The deal creates the world’s biggest brewing company by far, and combines most of the world’s biggest beer brands under the same roof.
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In an effort to assure regulatory approval of the transaction, SABMiller agreed to sell its 58 per cent stake in a venture with fellow brewer Molson Coors for $12 billion.
AB InBev said it expects to achieve at least $1,4 billion in pre-tax cost savings a year by the end of the fourth year after the deal is completed. The transaction catapults Molson into the position of the No. 2 brewer in the US with a 25% market share that is second only to AB InBev’s 45% share.
The competitive landscape in the USA will largely remain the same, with A-B InBev controlling big brands like Budweiser and Bud Light, while Molson Coors owns brands including Coors Light and Miller Lite.
“In markets, such as China, South Africa and other jurisdictions, we also intend to work closely with SABMiller to address any regulatory requirements”, he said in a conference call with journalists.
The research firm Euromonitor worldwide has estimated that a combined Anheuser-Busch InBev-SABMiller could account for 29 percent of global beer sales, after selling a few assets to win regulatory approval.
“Listing on the London Stock Exchange in 1999 was the launch-pad for our global ambitions, leading to the creation of the number two global brewer and a FTSE-10 company, with industry-leading shareholder returns”, SABMiller boss Alan Clark commented.
“The Brewers Association, the national trade association for America’s more than 4,000 small and independent breweries, is carefully reviewing the terms of the acquisition announced today by ABInBev and SABMiller, and, in the days ahead, we would urge the Congress and the Department of Justice to closely examine the potential effects on the USA marketplace and American consumers of this proposed deal”.
The deal reportedly arose due to AB InBev’s desire to grow in African, Asian and Middle Eastern markets.
Macy’s Inc., the largest USA department store company, posted third-quarter sales that trailed analysts’ estimates and cut its annual profit forecast as demand for apparel slumps.
AB InBev agreed to pay SABMiller £44 a share on October 13.
SABMiller reported net producer revenue gains in Latin America and Africa of 8% and 9% respectively at constant currency, but lower volumes in Europe and the US offset those gains.
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Molson will also retain the rights to all of the brands now in the MillerCoors portfolio for the U.S. market, including Redd’s and import brands such as Peroni and Pilsner Urquell.
