Anheuser-Busch InBev NV has made an official $107 billion offer for beer rival SABMiller Plc, sealing a deal that combines the world’s two biggest brewers into a company which now controls 50 percent of all of the industry’s profits.
To ensure regulatory approval, Molson Coors Brewing Co. will acquire SABMiller’s 58 percent stake in MillerCoors for $12 billion, giving it full control over brands like Blue Moon and Coors Light. The Budweiser maker plans to cut annual operating costs by $1.4 billion by amalgamating head-office roles.
Although dubbed “Megabrew” by analysts, there is no official word on the new entity’s name or if SABMiller’s senior management team will remain intact. Whatever name it operates under, it will be the world’s largest consumer-staples maker by earnings with expected profits of $25 billion.
The merged company will be listed in Brussels, Mexico and Johannesburg.
The deal gives AB InBev its first step into Africa, where by 2023 65 million people are due to reach the legal drinking age.
Jon Copestake, an analyst at the Economist Intelligence Unit says the deal “promises to transform the world’s brewing landscape.”
“The divestment of SABMiller’s North American business will placate American regulators to some degree, but there will remain regulatory obstacles to a merger of this size.”
AB InBev will finance the cash part of the deal from existing resources and third-party debt. The bank loans it lined up to raise $75 billion needed is a record commercial loan. For AB InBev Chief Executive Officer Carlos Brito, today’s deal caps off a $90 billion spree over the last ten years, turning a regional brewer into the undisputed global leader.
On the official announcement of the merger SABMiller shares rose 1.9 percent while AB InBev shares gained 2.2 percent.