Top beer companies looking to merge

AB InBev confirmed an approach had been made about a possible bid but said there was “no certainty” of a deal.

“The board of SABMiller will review and respond as appropriate to any proposal which might be made”, it said.

When it bought Budweiser-maker Anheuser-Busch in 2008, it allowed the ratio to rise to beyond 5 times. SABMiller is likely to consider the offer, if it provides good value for its shareholders, said sources close to the development.

The combination of the world’s two largest brewers would be the biggest mergers-and-acquisition deal of the year, creating one of the largest companies in the world as measured by market capitalization.

AB InBev have been eyeing up SABMiller for years now, and it just so happens that SABMiller’s share price has just dropped by around 15%, so it is flawless timing for AB InBev. According to research companies Euromonitor worldwide and IbisWorld, Anheuser-Busch and SABMiller account for roughly three quarters of the USA beer market, as well as 30% of beer sales across the globe.

Given the size of both companies, it is expected that AB InBev will have to sell several assets in order to comply with anti-trust rules, which could see it sacrifice some of its market share in China.

This latest takeover push by AB InBev comes as the USA beer market has become saturated.

However, he added, combining with No. 1 or AB InBev, would give it 75% of the overall US market, which is no tenable, but AB InBev would not have entered into this without have a plan of what they would be willing to divest.

SABMiller is particularly attractive to AB InBev because it has a strong foothold in the Africa market, what has been pegged as “the new frontier” by the beverage industry.

“It’s also bullish for deals in general”, Schlemmer said.

The sector is looking at consolidation faced with the increased popularity of so-called craft beers that are brewed by smaller independent firms, reported French news service AFP.

SABMiller is the second largest beer seller in the world and saw sales in London rising 23 percent.

“Most of the mainstream (beer) brands have not done very well”, Schmidt said.