The beer industry might soon receive a major shake-up, as the world’s two largest beer producers, Anheuser-Busch, the maker of Budweiser and Bud Light, and SABMiller, owner of the Miller Brewing Company, could possibly become united under the same corporation in the near future.
Anheuser-Busch InBev has stated that it intends to make an offer to acquire SABMiller in a corporate takeover. With all of their brands under one global umbrella, the potential acquisition would result in the company controlling roughly half of the beer industry’s profits worldwide.
No offer has been made at this time.
Anheuser-Busch InBev has said that it wants to cooperate with the board of SABMiller.
If the acquisition were to take place, it would be the largest ever in the history of the industry, while bringing an end to the longtime rivalry between the two conglomerates.
A combination of the two beer producers makes sense, as they maintain little geographical overlap, and they are not controlled by a family foundation.
With the news, shares of SABMiller stock have been skyrocketing. The stock had been performing poorly during the past year, which has made the potential acquisition more affordable for Anheuser-Busch.
The beer industry has been seeing a trend of companies combining their efforts in recent years. Beer companies are fighting to avoid a slowdown in the industry, as more drinkers are switching to craft beers, wine, and spirits, while others are simply consuming less alcohol.
One example can be seen in MillerCoors, a joint venture between SABMiller and the Molson Coors Brewing Company. The joint venture was announced in 2007.
Based on takeover rules within the United Kingdom, AB InBev has until 5 pm London time on October 14 either make an offer to SABMiller or to walk away from the transaction.
Any deal that takes place would mandate the backing of Altria Group Inc., which is the largest shareholder of SABMiller with a 27% stake in the company. Meanwhile, AB InBev would need to convince the group of Alejandro Santo Domingo to accept the deal as well. The group maintains a 14% stake in SABMiller.
However, there are some significant hurdles that must be overcome in order for the deal to occur.
Industry analysts believe that SABMiller would have to leave its joint venture with Coors, putting an end to MillerCoors. Not doing so would likely have the acquisition seen as an attempt to form a monopoly.
Additionally, AB InBev would most likely be required to sell SABMiller’s 49% stake in CR Snow, the Chinese brewery partner of SABMiller.
However, if the merger does take place, it would likely be seen as the triumphant finale of major global beer mergers, as the resulting company would be the dominant force in the beer industry.