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AB InBev deal could unite Peroni and Budweiser under one roof AB InBev deal could unite Peroni and Budweiser under one roof
(34 minutes later)
Beer brands Peroni and Grolsch could combine with Stella Artois and Budweiser to create one of the world’s largest companies, after Anheuser-Busch InBev approached rival SABMiller about a $275bn (£177bn) tie-up.Beer brands Peroni and Grolsch could combine with Stella Artois and Budweiser to create one of the world’s largest companies, after Anheuser-Busch InBev approached rival SABMiller about a $275bn (£177bn) tie-up.
The mega-deal to combine the two largest players in the industry would be the eighth largest takeover of all time and would create a company that produces a third of the world’s beer. The mega-deal to combine the two largest players in the industry would be the eighth-largest takeover of all time and would create a company that produces a third of the world’s beer.
SABMiller brews Peroni, Grolsch and London-based craft beer Meantime while AB InBev owns Stella Artois, Budweiser and Corona.SABMiller brews Peroni, Grolsch and London-based craft beer Meantime while AB InBev owns Stella Artois, Budweiser and Corona.
The brewery industry has been awash with speculation about a major deal involving AB InBev and SABMiller for months. However, City sources said that SABMiller is likely to launch a fierce defence against a deal and could instead look to combine with Diageo, the British owner of Guinness and Johnnie Walker whisky.The brewery industry has been awash with speculation about a major deal involving AB InBev and SABMiller for months. However, City sources said that SABMiller is likely to launch a fierce defence against a deal and could instead look to combine with Diageo, the British owner of Guinness and Johnnie Walker whisky.
SABMiller, which is listed on the London Stock Exchange, began life in 1886 when Charles Glass began making Castle beer for gold miners in South Africa. A decade later South African Breweries was founded off the back of Castle’s success and the company became the largest beer producer in the country. SABMiller, which is listed on the London Stock Exchange, began life in 1886 when Charles Glass began making Castle beer for gold miners in South Africa. A decade later, South African Breweries was founded off the back of Castle’s success and the company became the largest beer producer in the country.
During apartheid SAB was forced to abandon its ambitions to expand overseas and instead diversified into other sectors such as food and furniture. However, in the 1990s, at the end of apartheid, it focused again on beer and snapped up a string of overseas rivals. During apartheid, SAB was forced to abandon its ambitions to expand overseas and instead diversified into other sectors such as food and furniture. However, in the 1990s, at the end of apartheid, it focused again on beer and snapped up a string of overseas rivals.
Under the leadership of Graham Mackay, who moved the company to London from Johannesburg, it bought Grolsch, Foster’s and the Miller Brewing Company, which led to the creation of SABMiller.Under the leadership of Graham Mackay, who moved the company to London from Johannesburg, it bought Grolsch, Foster’s and the Miller Brewing Company, which led to the creation of SABMiller.
However, following the death of Mackay, the chairman, in 2013, speculation has grown that SABMiller could become a takeover target itself.However, following the death of Mackay, the chairman, in 2013, speculation has grown that SABMiller could become a takeover target itself.
AB InBev was only formed in 2008 by the merger of Anheuser-Busch, the American maker of Budweiser, and InBev, which itself was an amalgamation of Belgium’s Interbrew, the owner of Stella Artois, and AmBev, the Brazilian maker of Brahma. Since the creation of AB InBev the enlarged company has bought Grupo Modelo, the owner of Corona, for more than $20bn. AB InBev was only formed in 2008 by the merger of Anheuser-Busch, the American maker of Budweiser, and InBev, which itself was an amalgamation of Belgium’s Interbrew, the owner of Stella Artois, and AmBev, the Brazilian maker of Brahma. Since the creation of AB InBev, the enlarged company has bought Grupo Modelo, the owner of Corona, for more than $20bn.
SABMiller revealed in a stock market statement that AB InBev had informed the brewer it intends to make a takeover proposal, although no bid has yet been received. AB InBev then confirmed the approach and said it wanted to work with SABMiller on a deal, rather than pursuing a hostile takeover.SABMiller revealed in a stock market statement that AB InBev had informed the brewer it intends to make a takeover proposal, although no bid has yet been received. AB InBev then confirmed the approach and said it wanted to work with SABMiller on a deal, rather than pursuing a hostile takeover.
Under British takeover rules, AB InBev now has four weeks to make a formal bid or request an extension. If it fails to do either, the company will be blocked from making an approach for SABMiller for six months.Under British takeover rules, AB InBev now has four weeks to make a formal bid or request an extension. If it fails to do either, the company will be blocked from making an approach for SABMiller for six months.
The combined company would be worth $275bn. Shares in SABMiller rose 20% to £36.14 on Wednesday, valuing the brewer at £58.8bn. AB InBev shares rose 6.4%, valuing the company at $184bn.The combined company would be worth $275bn. Shares in SABMiller rose 20% to £36.14 on Wednesday, valuing the brewer at £58.8bn. AB InBev shares rose 6.4%, valuing the company at $184bn.
The deal is likely to attract the attention of competition regulations around the world, particularly in the US, where the brands would distribute Budweiser, Miller and Coors, the latter through SABMiller’s joint venture with Molson Coors. However, this issue could be resolved by SABMiller selling its 58% stake in the MillerCoors joint venture. The deal is likely to attract the attention of competition regulators around the world, particularly in the US, where the brands would distribute Budweiser, Miller and Coors, the latter through SABMiller’s joint venture with Molson Coors. However, this issue could be resolved by SABMiller selling its 58% stake in the MillerCoors joint venture.
The leading brewers are exploring mergers and acquisitions as sales of established brands come under pressure from craft beers.The leading brewers are exploring mergers and acquisitions as sales of established brands come under pressure from craft beers.
Spiros Malandrakis, an analyst at Euromonitor International, 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.”Spiros Malandrakis, an analyst at Euromonitor International, 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.”
The key players in deciding whether a deal between AB InBev and SABMiller goes ahead will be Altria, the US tobacco company that owns more than a quarter of SABMiller’s shares, and 3G Capital, the Brazilian private equity group. 3G controls almost half of AB InBev alongside the Belgian families that used to own Interbrew.The key players in deciding whether a deal between AB InBev and SABMiller goes ahead will be Altria, the US tobacco company that owns more than a quarter of SABMiller’s shares, and 3G Capital, the Brazilian private equity group. 3G controls almost half of AB InBev alongside the Belgian families that used to own Interbrew.
Fitch, the rating agency, said a deal would create a “global player” that widens the gap with rivals Heineken and Carlsberg. “It would be exposed to high growth and profitable markets and would require only limited divestments in relation to market overlaps,” it added.Fitch, the rating agency, said a deal would create a “global player” that widens the gap with rivals Heineken and Carlsberg. “It would be exposed to high growth and profitable markets and would require only limited divestments in relation to market overlaps,” it added.
In a statement, SABMiller said: “The board of SABMiller notes the recent press speculation and confirms that Anheuser-Busch InBev has informed SABMiller that it intends to make a proposal to acquire SABMiller.In a statement, SABMiller said: “The board of SABMiller notes the recent press speculation and confirms that Anheuser-Busch InBev has informed SABMiller that it intends to make a proposal to acquire SABMiller.
“No proposal has yet been received and the board of SABMiller has no further details about the terms of any such proposal. The board of SABMiller will review and respond as appropriate to any proposal which might be made.”“No proposal has yet been received and the board of SABMiller has no further details about the terms of any such proposal. The board of SABMiller will review and respond as appropriate to any proposal which might be made.”
In response, AB InBev said: “AB InBev confirms that it has made an approach to SABMiller’s board of directors regarding a combination of the two companies,” it said. “AB InBev’s intention is to work with SABMiller’s board toward a recommended transaction.”In response, AB InBev said: “AB InBev confirms that it has made an approach to SABMiller’s board of directors regarding a combination of the two companies,” it said. “AB InBev’s intention is to work with SABMiller’s board toward a recommended transaction.”
How the two companies compareHow the two companies compare
SABMillerSABMiller
Year founded: 2002Year founded: 2002
Key brands: Grolsch, Peroni, Foster’sKey brands: Grolsch, Peroni, Foster’s
Pints sold per year: 57bnPints sold per year: 57bn
Employees: 69,000Employees: 69,000
Market value: £59bnMarket value: £59bn
Chief executive: Alan ClarkChief executive: Alan Clark
Profits: £4.1bnProfits: £4.1bn
AB InBevAB InBev
Year founded: 2008Year founded: 2008
Key brands: Stella Artois, Budweiser, CoronaKey brands: Stella Artois, Budweiser, Corona
Pints sold per year: 81bnPints sold per year: 81bn
Employees: 150,000Employees: 150,000
Market value: £118bnMarket value: £118bn
Chief executive: Carlos BritoChief executive: Carlos Brito
Profits: £11.9bnProfits: £11.9bn
AB InBev’s brandsAB InBev’s brands
Stella ArtoisBudweiserCoronaBrahmaBoddingtonsLeffeHoegaardenLowenbrauBassStella ArtoisBudweiserCoronaBrahmaBoddingtonsLeffeHoegaardenLowenbrauBass
SABMiller’s brandsSABMiller’s brands
GrolschPeroniFostersMillerMeantimeLechBlue MoonCastleGrolschPeroniFostersMillerMeantimeLechBlue MoonCastle