Brewers prepare for large beer merger

The $12 billion side deal includes global rights to the Miller brand and will give Molson Coors full control of such popular brands as Coors Light and Blue Moon.

The deal is dependent on regulatory approvals and the successful completion of AB InBev’s $107 billion acquisition of SABMiller, which moved a step forward with a formal offer on Wednesday.

AB InBev’s £71bn takeover was formally agreed yesterday, after weeks of negotiations and several extended deadlines from United Kingdom regulators as the two brewing giants ironed out the details of the biggest ever corporate merger in British history.

To many in the craft beer industry, it looks like AB InBev is trying to swallow as much market share as it can, with the acquisition of both brands and distribution channels – including the purchases of two Bay Area beer distributors earlier this fall. The company also says the combined company “would be able to provide more choice and more opportunities for consumers to taste and enjoy the world’s best beers”.

As Barron’s reported in September, Molson stands to win big from the chain reaction of deals meant to quell antitrust concerns facing a deal between Anheuser-Busch and SABMiller.

The enlarged AB InBev – which does not have a name yet – will also need to address regulatory issues in China, which drinks a quarter of the world’s beer.

“SABMiller has been an excellent partner for the past seven years and we are extremely proud of the organization that our teams have created”, said Mark Hunter, president and CEO of Molson Coors.

Africa’s global beer volume is expected to grow 44% between 2014 and 2025, compared to the 16% global rate over that period, AB InBev said.

Around 35 per cent of annual cost savings will come from making changes in this area, but AB InBev said it expected that “key members of SABMiller’s management team and employees would play a significant role in the combined group”. SABMiller, which has a strong footprint in Africa and Latin America, has benefited from stronger volume from these regions but continued to report lower volume in Europe and the U.S. AnHeuser-Busch InBev NV was looking for a buyer for SABMiller’s Miller Coors stake before finalizing the bid offer.

Following the announcement, SABMIller stock jumped 2.6 percent and AB InBev’s shares were up 1 percent.

SABMiller’s board of directors is recommending that shareholders accept the deal, and the directors have agreed to vote their shares in favour of the transaction. The Shanghai Composite was up 0.3%, the Nikkei 225 rose 0.1% while the Hang Seng fell 0.2%.