Beer giant Anheuser-Busch InBev (of Budweiser and a gazillion others) and SABMiller (of Miller and a gazillion different others) formalized their merger Wednesday morning, right up against regulators’ deadline.
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“We believe this combination will generate significant growth opportunities and create enhanced value to the benefit of all stakeholders”, said AB InBev Chief Executive Officer Carlos Brito, according to Bloomberg.
“SABMiller has an unmatched footprint in fast-growing developing markets, underpinned by our portfolio of iconic national and global brands”, SABMiller chairman Jan du Plessis said.
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. In October, the companies agreed a “pact in principle” to go ahead with the deal on the basis of a £44-per-share ($66.70) price.
Beer consumption on the continent will grow by more than anywhere else over the next five years, said industry experts Plato Logic. Analysts said the cost-conscious company would probably exceed its $1.4 billion savings target, having done so after previous acquisitions in the United States and Mexico.
But the combined company will have total revenue of about $US64 billion, excluding SABMiller’s joint ventures.
While the ABI-SABMiller blockbuster wouldn’t alter the new entity’s position in the USA market-where ABI now has a market share of almost 50% even after years of decline for its flagship Budweiser brand-it would create a brewing force with unparalleled global scale and reach.
SABMiller chairman Jan du Plessis highlighted the cash return for shareholders and long-term potential as why the Board of SABMiller recommended the takeover offer. AnHeuser-Busch InBev NV was looking for a buyer for SABMiller’s Miller Coors stake before finalizing the bid offer. While it may be now controlling 20.8% of the world’s beer in 2014, AbInBev has been missing a foothold in emerging markets, particularly on the African continent, where South African-born SABMiller has a presence in 38 countries.
SABMiller operates in Nigeria as the owner of two breweries – Intafact Beverages Limited, in which SABMiller made an investment of about US$100m in the Onitsha brewery that was commissioned August 30, 2012, and Pabod Breweries.
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“They’re selling it to Molson Coors (TAP – Get Report) of Canada”, Colley said.
