No. 1 global brewer AB InBev reaches deal to acquire rival SABMiller

As part of a planned takeover of SABMiller, AB InBev said it would sell a few major beer brands to rival Molson Coors.

The deal will better free up SABMiller to receive U.S. regulatory approval for its takeover by Budweiser brewer AB Inbev, which was confirmed on Wednesday (11 November).

The agreement came after weeks of discussions since September with SABMiller rejecting several previous offers from AB InBev before accepting the deal.

The deal is expected to be completed in the second half of 2016, pending clearance from regulators and shareholders.

As reported by Reuters, the offer by the world’s biggest brewery also comes with an offer to sell SABMiller’s stake in the USA venture MillerCoors that will help win regulatory approval.

Lagers and light beers in general have seen sales tumble and a smaller market share, which has tumbled from 35.5% of the US beer market in 2007 to 31.8%, with craft and imported beers both assuming larger shares.

SABMiller plc(LON:SAB) now has a 58% stake in a joint venture in the U.S. with the Canadian brewing company Molson Coors Brewing Company(NYSE:TAP).

AB InBev has labeled this merger as an effort to “create a truly global brewer” – and a beer giant that still has more room to grow.

The other question being what kind of anti-trust action, if any, the U.S. Justice Department would take to chip away at the new beer superpower.

With SABMiller, AB InBev is buying into Latin American countries such as Colombia and Peru and Africa which has a fast-growing middle-class.

“By pooling our resources”, he said, “We will build one of the world’s leading consumer products companies, benefiting from the experience, commitment and drive of our combined global talent base”.

There’s a share and cash alternative that values SABMiller’s shares at £41.85 a share, but that’s aimed at its two biggest institutional shareholders – Altria Group, the holding company for tobacco firm Philip Morris and the billionaire Santo Domingo family – who will get a few money for their SABMiller investments while also remaining shareholders in the enlarged group.

One of AB InBev’s prizes in creating a global beer company will be to gobble up SABMiller’s footprint in Africa.