Molson Coors pays $12 billion for big U.S. beer brands

The announcement that they had completed the deal came just before a deadline Wednesday, under British takeover rules, for Anheuser-Busch InBev to make what is considered a formal offer.

An agreement was made once Anheuser-Busch agreed to sell the company’s United States interest of MillerCoors, 58%, to Molson Coors (NYSE:TAP) in a deal valued at $12 billion. The deal would include rights to the Miller brand name and would give Molson Coors full control of operations.

After weeks of discussions, Anheuser-Busch InBev and SABMiller reached an agreement in principle on October 13.

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.

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.

“AB InBev, based here in Belgium, already is the biggest player in the US market, with brands such as Budweiser and Stella Artois”.

SAB investors will receive £44 in cash for each of their shares, making way for a merger that AB InBev estimates will create savings of $1.4bn (£0.9bn) in pre-tax costs each year.

“We had a good first half, stripping out the effects of adverse exchange rates, with strong growth in Africa and Latin America”, said chief executive Alan Clark.

One of AB InBev’s prizes in creating a global beer company will be to gobble up SABMiller’s footprint in Africa.

“I don’t think this changes a whole lot for the US or Canadian beer drinker, at least not initially”, said Fleck.

That should ease concerns that AB InBev would have a stranglehold on the US market after the merger and pave the way for approval by American regulators. 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”.