Cheers! Big Beer’s $105 Billion Takeover Deal Finalized

As part of the deal, SABMiller will sell its stake in a venture with Molson Coors. AB InBev seeks to cut $1.4 billion costs after the takeover, as reported by CNBC.

If given the green light, the tie-up would see the enlarged group own a stable of a few of the best-known beer brands, including AB InBev’s Budweiser, Corona and Stella Artois together with SABMiller’s Grolsch and Peroni. It will have a combined market capitalisation of about $250 billion.

Approved by the board of SABMiller in October, the deal will be the fourth largest in history and the largest in British history. While it may be now controlling 20.8% of the world’s beer in 2014, AbInBev has been missing a foothold in emerging markets, particularly on the African continent, where South African-born SABMiller has a presence in 38 countries. It’s set its sights on global domination, likely to manifest in expansion into developing markets, especially Africa and Latin America.

Molson Coors CEO Mark Hunter said the “game-changing” transaction to acquire full ownership of Miller Coors – a partnership with SAB Miller – will allow the company to invest more in its brands and increase consumer choice. “Craft brewers are growing rapidly, and the beer industry faces ever-increasing competition from wine and spirits”.

AB InBev said it would seek a secondary listing and regional headquarters in Johannesburg.

SABMiller shares were up two percent at £40.53 at 0920 GMT on Wednesday, reflecting a degree of uncertainty around regulatory hurdles before the transaction is concluded.

If yesterday’s deadline to complete the deal was missed – there had already been three extensions – A-B InBev would not have been allowed to make another approach for up to six months.

“With today’s developments, execution is still important but they have a bit of breathing room”, said Morningstar analyst Philip Gorham. AB InBev shares added 2.16 per cent to 113.60 euros in trading in Brussels.

There’s a share and cash alternative that values SABMiller’s shares at £41.85 a share, but that’s aimed at its two biggest institutional shareholders – Altria Group, the holding company for tobacco firm Philip Morris and the billionaire Santo Domingo family – who will get a few money for their SABMiller investments while also remaining shareholders in the enlarged group. “This is guaranteed and there may well be potential for more”.