Anheuser-Busch InBev And SABMiller Agree On Merger Terms

In anticipation of the increased scrutiny by antitrust regulators, Belgium-based AB InBev also agreed to sell SABMiller’s near 60% stake in MillerCoors, a joint US venture with Denver-based brewer Molson Coors.

AB InBev expects to cut cost by $1.4 billion after the takeover.

In SABMiller, it is buying a tighter-run operation, with pricing and distribution gains due to scale key to the deal, according to Warwick Business School professor John Colley. That foresight made SABMiller attractive to AB InBev, already the world’s biggest beer maker, as it joins the list of worldwide companies seeking to cash in on the newest growth frontier.

Anheuser-Busch InBev said Wednesday that it had completed an agreement to acquire its closest rival, SABMiller, for almost $106 billion, creating what it said would be the first “truly global brewer”.

In an effort to preempt that, SABMiller announced this morning that it would sell its share of MillerCoors to Molson Coors for $12 billion.

The two bigger deals were telecom company Vodafone’s purchase of Germany’s Mannesmann for $US172 billion in 1999 and Vodafone’s sale of its 45 per cent stake in Verizon Wireless to Verizon for $US130.1 billion in 2013.

But the US market may be the least of AB InBev’s concerns.

“In short, we will be a more competitive global company, better positioned to invest behind our core brands, expand our above premium portfolio, strengthen our commercial execution capabilities and deliver long term shareholder value”.

The deal, reached after months of negotiations, will create a behemoth in the beer industry with annual revenues of about $64 billion and will give AB InBev more exposure in faster-growing emerging markets, particularly in Africa and Latin America.

Today, SABMiller-which has a secondary listing on Africa’s largest stock exchange, the Johannesburg Stock Exchange (JSE)-is the second largest company on the JSE by market capitalization.

Brito told investors that the two companies have a “largely complementary” footprint and that the new company will “take its place as one of the leading consumer products companies”.

The Brazilian and Belgian families that are in control of AB InBev will have their ownership become diluted from over 50% down to around 34.5% and will have a hold of 9 of the 15 members of the board of directors.