Big merger would create beer behemoth

AB InBev can trace its origins to a merger between a pair of Brazilian brewers in 1999. No offer has yet been made.

In other European trading, shares in Glencore climbed after the Swiss mining and commodities giant announced it had raised $US2.5bn via a shares sale as part of its vast debt-slashing plan. SABMiller was rebuffed by Heineken previous year, and SABMiller could launch a new bid for it or another rival to bulk up and scare off AB InBev. Before Wednesday, SABMiller’s stock had fallen 18 percent in a year.

The company bought Czech brewer Plzensky Prazdroj, maker of Pilsner Urquell, in 1999, U.S.-based Miller Brewing Co.in 2002 and Foster’s of Australia in 2011. Its growth is now set to slow during the next five years, estimates compiled by Bloomberg show.

Spiros Malandrakis, an analyst at Euromonitor global, said: “As the craft movement is coming of age and solidifies its position as a key disruption force within beer and the entire alcohol industry, corporate consolidation can perhaps provide some last drops of stock market intoxication”. SABMiller disclosed the approach in response to what it called “recent press speculation”.

As with any mega-deal, there’s a lot that can go wrong. Speculation intensified further yesterday, after it was reported that Altria, owner of a 27-percent stake in SABMiller, had cancelled two appearances by representatives scheduled this week at consumer goods conferences hosted by BofA Merrill Lynch and Stifel. ABI, led by the Budweiser franchise, controls just under half of the USA beer market, while MillerCoors-a joint venture between SABMiller and Molson Coors-accounts for more than 25%. Shares of AB InBev rose seven per cent. SABMiller also owns 20 percent of closely-held French drinks company Groupe Castel.

Should the brewers finally make it down the aisle, they potentially face disposal demands from antitrust regulators around the globe, creating a whole host of new deal opportunities in the sector. AB InBev, by contrast, sold 459 million hectolitres and had revenue of $47.06 billion.

These kind of moves suggest executives at both companies may be engaging in negotiations.

Brands: Miller, Peroni, Milwaukee’s Best, Grolsch.

In the largest beer merger to date, Belgium-based InBev acquired St. Louis-based Anheuser-Busch for $52 billion in 2008, and made St. Louis its USA headquarters. SABMiller may also reject any potential bid if deemed too low, the people said.