Thursday, April 25, 2024

Major beer merger attempt

UK-based brewer SABMiller has accepted a takeover bid by Anheuser-Busch (AB) InBev of around £68 billion ($148.11 billion).

Belgium-based AB InBev has made five attempts to secure the British brewer in recent weeks and while the deal is subject to approval from regulators and is still described as a “possible offer”, it represents an excellent result for SABMiller shareholders, with AB InBev paying £44 ($93) per share.

AB InBev is the world’s biggest brewer, while SABMiller is the second biggest.

AB InBev produces brands including Corona, Stella and Budweiser. SABMiller is behind Aguila and Birell among others, as well as several iconic Australian beer brands, including Carlton and VB, following its takeover of Carlton & United Breweries (CUB) in 2011.

The deal would impact on Australia by causing the distribution rights for Corona, Stella Artois and Beck’s to move from Lion to CUB, which may require certain brands to be sold in order to gain regulatory approval.

Euromonitor International Senior Alcoholic Drinks Analyst Jeremy Cunnington says the deal between the two brewers creates a global giant that dwarfs its nearest rival.

“The deal creates a global giant accounting for 29 per cent – assuming US and China divestments – of the 200 billion-litre global volumes, more than three times bigger than its nearest rival, Heineken,” he said.

“With all the major M&A targets now taken, and M&A so important to brewers’ growth, it raises the question of where next for global brewers as they bid to carry on growing.”

He added that it was still not clear how the redistribution requirements of the merger would impact on Australian consumers.

“The short answer is we don’t know, nor are we likely to know until two to three months down the line when the competition authorities take a look at it,” Mr Cunnington said. “We’re still at the engagement stage of the arrangement, we’ve still got the rest of the wedding plans to be made and, no doubt, various in-laws, or regulators, will stick their oars in.”

In a statement about the deal, AB InBev said: “The Board of SABMiller has indicated to AB InBev that it would be prepared unanimously to recommend the all-cash offer of £44 per SABMiller share to SABMiller shareholders, subject to their fiduciary duties and satisfactory resolution of the other terms and conditions of the ‘possible offer’.

“In connection with the possible offer, AB InBev would agree to a ‘best efforts’ commitment to obtain any regulatory clearances required to proceed to closing of the transaction. In addition, AB InBev would agree to a reverse break fee of US$3 billion ($4.08 billion) payable to SABMiller in the event that the transaction fails to close as a result of the failure to obtain regulatory clearances or the approval of AB InBev shareholders.”

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