AB InBev Could Bid $106 Bln For SAB Miller

AB InBev became the largest brewer in the world, surpassing SAB, when InBev acquired Anheuser-Busch of the U.S. for about $52bn in 2008.

SBM Offshore N.V surged 14.3% to €10.73 after the Netherlands-based offshore energy explorer said Brazil-based subsidiary received written notification from integrated energy company Petrobras to participate in the recently issued Libra and Sépia FPSO tenders in Brazil.

A company spokesman said the nominations were “business as usual” and followed various retirements and new appointments made earlier this year.

A combined entity would control 30% of global beer volumes, including 400 brands. It seems more likely now that SABMiller will accept a strong offer from AB InBev, especially as a number of key shareholders have indicated that they would back the move.

The offer would value SABMiller at about £68bn, or R1.45-trillion, which is an 11% premium to Monday’s R1.3-trillion market capitalisation on the JSE.

When it bought Budweiser-maker Anheuser-Busch in 2008, it allowed the ratio to rise to beyond 5 times. Anheuser InBev was formed following acquisition of American brewer Anheuser-Busch by Belgian-Brazilian brewer InBev, which in turn was a merger of AmBev and Interbrew.

Agreeing on the sale price will not be the only hard task. The company reported $1.21 EPS for the quarter, missing the Zacks’ consensus estimate of $1.35 by $0.14. According to a Bloomberg report, SAB Miller will have to exit its various joint ventures.

Given the size of both companies, it is expected that AB InBev will have to sell several assets in order to comply with anti-trust rules, which could see it sacrifice a few of its market share in China. Sanford C Bernstein analyst Trevor Stirling in an interview to the Wall Street Journal commenting on a possible deal said: “By acquiring SABMiller, Anheuser-Busch InBev would be buying growth in Latin America and in Africa and buying the opportunity to take a lot of cost out of SAB’s back office operations”.