$245B BEER GIANT: AB INBEV BREWS UP SABMILLER TAKEOVER
‘Bud-Miller’ merger would create world’s biggest suds maker
The King of Beers is looking to expand its empire in a big way.
After years of speculation about a possible takeover, industry leader Anheuser-Busch InBev said Wednesday it had approached chief rival SABMiller on a takeover that would create the world’s biggest beermaker.
Analysts and attorneys say the deal would face significant antitrust hurdles. Still, news of the potential tie-up Wednesday boosted SABMiller shares 19.9% and AB InBev shares 7.2%.
If completed, the deal would create a company with more than $245 billion in market value and a dominant presence in the global beer industry, combining such AB InBev brands as Budweiser and Corona with SABMiller brands such as Miller and Peroni.
The latest takeover push comes amid saturation of the U.S. beer market. The overall volume of beer sales in the U.S. were projected to be down 0.4% in the second quarter, even as the red-hot craft beer segment was expected to see sales volume jump 11.1%, according to the market tracking firm Technomic Inc.
SABMiller is particularly attractive to AB InBev because it has a strong foothold in the Africa market, pegged as “the new frontier” by the beverage industry. Close to a third of SAB’s profits come from that region, while AB InBev has a limited presence there, says Jonny Forsyth, a global drinks analyst at market research firm Mintel.
One area the potential merger would likely have little impact is the growing craft beer industry, says Eric Schmidt, analyst at Technomic. Craft beer production grew 15% in the first half of 2015 in the U.S. compared to the same period last year, according to the Brewers Association, which represents small, independent beermakers.
While the big brewers were slow to react to the emergence of craft beer, Schmidt says they’ve been more aggressive in pursuing the growing hard cider segment to make up for diminishing beer sales. MillerCoors launched Smith & Forge cider last year, and AB InBev bought the Johnny Appleseed brand.
“Most of the mainstream ( beer) brands have not done very well,” Schmidt said.
Talk of an AB InBev takeover of SABMiller has brewed for years. SABMiller approached Amsterdam-based Heineken last year about buying out the world’s third-largest brewer. Such a deal would have made SABMiller too big for AB InBev to target, but Heineken rebuffed the overture.
Brazil’s AmBev and Belgium’s Interbrew merged in 2004 to become the biggest global brewer by volume. In 2008, the company bought Anheuser-Busch in a $52 billion deal and became AB InBev, which established its headquarters in Leuven, Belgium, while keeping a major U.S. presence.
Last year, AB InBev completed a $20 billion takeover of Mexican brewer Grupo Modelo.