Anheuser-Busch InBev, the world’s largest beer maker, announced Wednesday that it has reached an agreement with the Justice Department clearing the way for USA approval of its acquisition of SABMiller.
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SABMiller Plc will wait until Chinese regulators approve Anheuser-Busch InBev NV’s takeover before weighing the deal’s terms, Chairman Jan du Plessis said, as the pound’s plunge has made the $102 billion acquisition much less attractive for shareholders.
In a related deal and in order to avoid antitrust fears, SABMiller agreed to sell its 58 percent stake in its joint venture with MillerCoors to Molson Coors Brewing Co.
Under the settlement with the Justice Department, which requires court approval, AB InBev is prohibited from acquiring a distributor if the purchase would cause more than 10 percent of AB InBev’s beer in the U.S.to be sold through its own distributors.
The deal marries AB InBev’s Budweiser and Stella Artois beers with SABMiller’s Miller and Pilsner Urquell.
The Obama administration is giving approval for a almost $100 billion beer merger between the world’s two largest brewers, with conditions. Last month, the merger received approval from South Africa’s Competition Commission on the condition that it sell SABMiller’s stake in liquor maker Distell Group and invest $68 million in local agriculture and other development.
With the green light from the Justice Department, Belgium-based A-B InBev said it’s on track to complete the transaction – the biggest-ever combination in the beer industry – in the second half of 2016.
“Instead of one in three beers worldwide being brewed by AB InBev post the deal, this is looking like one in four or even five”, he said. Craft beer companies had vocally objected the practice, which they argued hurt their ability to sell. AB InBev will pay £44 in cash per SAB share. It now owns seven US craft breweries and plans to close a deal for an eighth, Devils Backbone. This will help ensure that beer enthusiasts can continue to enjoy a vast variety of options from the more than 4,600 breweries in the U.S. Both The Children’s Investment Fund (TCI) and hedge fund Elliott Advisors have taken small stakes, prompting talk that the two could lead a push for AB InBev to bump up its cash offer.
AB InBev will not end deals with any wholesalers once the SABMiller deal closes.
“There was pressure from some SABMiller shareholders to … reconsider the 44-pound-a-share offer following the plunge in the pound since the United Kingdom voted to leave the European Union”, writes Bloomberg’s David McLaughlin.
After explaining the mathematics of it all, Dow Jones’ Mickle and Kendall say, “It is far from guaranteed that SABMiller would seek better terms for a deal that already has been signed – or that AB InBev would agree to raise its offer”.
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Anheuser-Busch InBev and SABMiller branded beers. A-B agreed to cap the number of distributors it owns so that no more than 10 percent of its annual volume is distributed by company-owned distributors and agreed it wouldn’t terminate existing distributors as a result of its acquisition of SABMiller.
