AB InBev Moves One Step Closer to SABMiller Acquisition

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AB InBev SABMiller

Budweiser may claim to be the King of Beers, but it is really its owner, Belgium’s Anheuser-Busch InBev, that is deciding what will happen next in the world of brewing, especially since it has now added its main rival, SABMiller, to its collection.

The agreement to the approximately $106 billion deal was announced Wednesday along with the news that AB InBev would send off one of its newest pieces, a 58 percent stake in MillerCoors in the US, to be owned by Molson Coors Brewing for around $12 billion, the New York Times reports. This was purely to keep regulators from getting too antsy about just how dominant AB InBev has become. Even though AB InBev was already pretty sprawling, this transaction will help it grow in Africa as well as Latin America.

“We believe the strategic rationale behind the combination is extremely compelling,” Carlos Brito, AB InBev chief executive, said on a conference call with reporters, the Times reports. “It creates new growth prospects for the combined company. It allows us to build a better world together.” (A better world apparently includes more Budweiser being shipped to Latin America.)

The deal isn’t by any means done. Shareholders will need to vote on it and regulators will have to sift through the details. The Associated Press points out that regulators may have a problem with the new company’s ownership of the incredibly popular Chinese beer Snow, which SABMiller had a 49 percent stake in. The word is that China now drinks a quarter of the world’s beer supply. (That stat comes without the help of tailgating parties.)

It is expected that all of that legal dickering will continue through the second half of 2016. If the deal doesn’t happen for some reason, AB InBev will be on the hook for $3 billion in fees, Reuters notes, so the company must be feeling fairly confident that it will get through all the coming hurdles.

It doesn’t appear that there will be much of a barrier put up by SABMiller’s shareholders. Tobacco giant Altria, which is one of the company’s biggest investors, and Colombian family Santo Domingo, which also has big bucks in the company, both are supporting the deal, the Times notes. According to the Wall Street Journal, Altria could end up with a 10.5 percent stake in the new company while the Santo Domingo would end up with about a 6 percent stake.

The new company won’t totally dominate the world’s beer market, though its bottles and cans will make up 29 percent of the market, UPI reports. Craft brewers that have resisted the urge to be bought out by the big brewers will now have a much larger beerhemoth to battle.

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