AB InBev said it had agreed to sell SABMiller’s 58 percent stake in MillerCoors to the venture’s other major shareholder, Molson Coors, for US$12 billion.
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“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. The deal will cost the world’s largest brewer $105 billion and is expected to raise the company’s yearly revenue to $64 billion.
The deal is dependent on regulatory approvals and the successful completion of AB InBev’s $107 billion acquisition of SABMiller, which moved a step forward with a formal offer on Wednesday.
It will be “the largest beer merger in history and one of the largest corporate mergers”, writes Lisa Brown in the St. Louis Post-Dispatch when, pending regulatory and shareholder approval, it closes in the second half of 2016.
It would also gain a stronger hold in “key emerging regions with strong growth prospects, such as Asia, Central and South America, and Africa”, according to the companies.
That foresight made SABMiller attractive to AB InBev, already the world’s biggest beer maker, as it joins the list of global companies seeking to cash in on the newest growth frontier.
As Barron’s reported in September, Molson stands to win big from the chain reaction of deals meant to quell antitrust concerns facing a deal between Anheuser-Busch and SABMiller. SAB employs a few 69,000 people world-wide, including 750 in Britain, while has around 155,000 employees.
Under the terms, AB InBev is offering to pay £44, or about $66.49, a share for SABMiller.
Based on Tuesday’s closing share prices and current exchange rates, the offer is worth 70 billion pounds or $106-billion.
Brittany Weissman of Edward Jones said the deal likely won’t change much for Canadian consumers.
What’s more, AB InBev is losing market share in its biggest market, the United States, which accounts for 30% of revenues.
“SABMiller has been an excellent partner for the past seven years and we are extremely proud of the organization that our teams have created”, said Mark Hunter, president and CEO of Molson Coors.
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“AB InBev’s offer represents an attractive premium and cash return for our shareholders and secures earlier delivery of our long-term value potential, which is why the board of SABMiller has unanimously recommended AB InBev’s offer”, Jan du Plessis, the SABMiller chairman, said in a news release.
