AB InBev SABMiller merger fallout continues

15 October, 2015

Shockwaves from the proposed merger between the two largest breweries in the world, announced earlier this week, continue to reverberate around the sector.

SABMiller accepted AB InBev’s fourth revised offer of £44 a share on Tuesday. The deal values SABMiller at £68 billion.

In the US, attention is turning to the combined companies dominance of the beer market, where they would own 78% of all beer sold.

Speculation is rife that SABMiller will be forced to sell its majority stake in the MillerCoors joint venture with Molson Coors.

SABMiller currently owns 58% of the joint venture, which it might sell for anywhere between £6.2 billion and £8.7 billion, according to the Financial Times.

The most likely buyer is the junior partner in the venture, Molson Coors. If the AB InBev merger goes ahead, it will trigger a clause in the joint venture allowing Molson Coors to increase its stake to 50% and appoint a new MillerCoors chief executive.

However, Dutch brewer Heineken is also considered a likely candidate for SABMiller’s stake.

Heineken is currently the world’s third largest brewer and is understood to be keen to expand in the Americas.

Elsewhere in the US. Reuters reports that AB InBev is being investigated by the Justice Deparment for anti-competitive practices in the beer market.

AB InBev has been acquiring distributors across the US, and there are concerns that it is using its position to unfairly limit craft breweries access to the market.

Craft beer currently represents 11% of the US beer sector, but is growing quickly. In 2014 craft beer sales rocketed by 17.6% while mainstream beers only managed 0.5% growth.

Worldwide, SAB Miller may also be forced to sell its stake in China’s largest brewer CR Snow, a joint venture with China Resources Enterprise.

And in South Africa, regulators are understood to be studying the proposed merger closely. SABMiller was founded in South Africa, and conditions were reportedly attached to the company’s operations when it redomiciled to London.

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