AB InBev to sell MillerCoors stake as part of SAB deal

In Canada, the beer market has always been dominated by Molson Coors and AB InBev, through its ownership of Labatt, although the two beer giants have increasingly been challenged by the popularity of smaller local craft brewers.

“This kind of deal underpins the fact that there is still plenty of cash on the sidelines to be put to use if there is value in synergies”, said Mike McCudden, head of derivatives at stockbroker Interactive Investor.

A formal offer by AB InBev is just one of the hurdles facing its acquisition of SAB.

Commenting on today’s announcement, Carlos Brito, Chief Executive Officer of AB InBev, said, “We are excited about our agreement on the terms of a recommended acquisition of SABMiller to build the world’s first truly global brewer”. Since then, they had been negotiating the details of the merger. AB InBev will eventually merge into Newco and it will hold the combined group.

The deputy chairman of the John Lewis Partnership and managing director of the group’s upmarket food business argued that companies which prioritise shareholder value are responsible for the lack of trust in business.

Each SABMiller shareholder will be entitled to receive £44 per share in cash – nearly twice the £29.34 share price on 14 September, the last day of trading before talks of an offer began.

As a result, Anheuser-Busch InBev would probably pay 69.8 billion pounds.

AB InBev, whose takeover of SABMiller would be one of the largest mergers in corporate history, said it expected to achieve $1.4 billion in annual savings four years after completion of the deal, projected for the second half of 2016.

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. The company is focusing on global expansion in Central and South America and will also look to expand volume in Europe, Australia, India and parts of Africa, Hunter said. (TAP) was nearing a deal to buy the rest (http://www.wsj.com/articles/molson-coors-nears-deal-to-buy-remaining-millercoors-stake-1447180321) of the MillerCoors LLC USA joint venture, paving the way for SABMiller to cement its sale to AB InBev.

SABMiller and Molson Coors formed the joint venture in 2008.

SABMiller is known for the beers Grolsch, Peroni and Miller light.