AB InBev Agreed to Buy SABMiller for $107 Billion

The deal puts a huge portion of the world’s beer market under the same umbrella: The AB InBev-SABMiller union now has an estimated global market share of close to 30% after divestitures, and it controls six of the 10 most popular beer brands in America.

The deal also means SAB’s listing on the London Stock Exchange will be cancelled, with InBev promising to list its shares in Johannesburg and Mexico alongside the group’s current Euronext listing.

AB InBev revealed plans to make savings of at least $1.4bn (£924m) a year from the combined group, which is likely to stoke fears of job cuts. The two firms had previously extended the deadline for a formal offer twice after reaching an agreement on October 13.

“We believe the strategic rationale behind the combination is extremely compelling”, Carlos Brito, the Anheuser-Busch InBev chief executive, said on a conference call with reporters on Wednesday.

It has lined up $75 billion in financing from banks, which is a record for a commercial loan.

The merger isn’t expected to be finalized until the second half of 2016.

The third-biggest brewer globally is Heineken, which recently hiked its stake in India’s top beer maker United Breweries that sells Kingfisher beer.

Now, there’s no questioning whether Anheuser-Busch InBev sits atop the beer throne.

Molson Coors will almost double its size once it completes a US$12-billion purchase that secures full ownership of its USA beer business and gains worldwide control of the Miller brand name. The concern is that the combined company will wield too much power in key markets, resulting in higher beer prices for consumers.

“In short, we will be a more competitive global company”, he said.

According to analysts Euromonitor global, “AB InBev’s acquisition of SABMiller is the natural conclusion of over a decade of consolidation within the brewing industry”.

As well as being conditional on the successful completion of the AB InBev and SABMiller deal, this buyout will also be subject the customary regulatory approvals in the US.

Then the Belgium-based beverage maker revised his proposal to pay £44 a share in cash as well as offered a partial share alternative option for 41% of the stake owned by two largest shareholders of SABMiller’s – Altria and BevCo. This buyout will make the way clearer for $106-billion merger of SABMiller Plc and Anheuser-Busch InBev NV.

To ease concerns the brewing behemoth might get a stranglehold of the US market, SABMiller will sell its 58 percent stake in a venture with fellow brewer Molson Coors for $12 billion.