AB InBev eyes rival in S$378b takeover bid

SABMiller said its board “will review and respond as appropriate to any proposal which might be made”.

In a statement, SABMiller said in response to press speculation it had been informed that AB InBev intended to make a bid proposal for the company.

However, any potential deal would face regulatory scrutiny.

According to Reuters, based on current price, the merger of ABInBev and SABMiller would have a market value of around $270 billion. In 2011, AB InBev’s purchase of the beloved Chicago craft brewer Goose Island brought out the Chicken Littles, who were convinced it was a death knell for Honker’s Ale.

While the big brewers were slow to react to the emergence of craft beer, Schmidt said they’ve been more aggressive in pursuing the growing hard cider segment to make up ground for the diminishing sale of their beer brands. A recent survey conducted by AB InBev found that 44 percent of Americans between the ages of 21 and 27 have never even tried its flagship brew, Budweiser, which once dominated the US market.

Wednesday, SABMiller (LON:SAB) shares jumped more than 23 percent, to 3,718.18 British pence ($57.37), in London, while Anheuser Busch Inbev (EBR:ABI) shares rose more than 6 percent, to 113.60 euros ($115.41), in Brussels.

The possible merger of the two companies would create a “super brewery” as the combined entity would own nine of the world’s top 20 beers by volume and have annual sales of $55 billion.

SABMiller is particularly attractive to AB InBev because it has a strong foothold in the Africa market, what has been pegged as “the new frontier” by the beverage industry.

SABMiller is the second biggest brewing company in the world.

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 some of its market share in China. AB Inbev’s intention is to work with SAB Miller’s board toward a recommended transaction. Small brewers say this has made it increasingly hard to get their beers on the shelves or on tap.

However, any takeover would also give the North American beer group Molson Coors the option of buying out SABMiller from their joint venture there, MillerCoors, which has about a quarter of the market.