Commentary

A-B InBev, SABMiller Seal A Deal Just Before Closing Time

Anheuser-Busch InBev and SABMiller agreed to merge today in a $105 billion cash-and-stock deal completed with a 5 p.m. UK Takeover Panel deadline looming. In addition, to grease the regulatory skids, SABMiller said it would sell its 58% ownership of MillerCoors in the U.S. to its joint venture partner, Molson Coors Brewing Co., for about $12 billion. 

It will be “the largest beer merger in history and one of the largest corporate mergers,” writes Lisa Brown in the St. Louis Post-Dispatch when, pending regulatory and shareholder approval, it closes in the second half of 2016. 

Indeed, the combined entity will brew nearly 30% of the world’s beer. Both companies will be operating under a new holding company, Newco, which is being formed in Belgium for the purposes of the transaction, according to the release announcing the deal. But don’t go looking for a six-pack of Newco Pilsner at your local Kroger’s.

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“No details were disclosed about the makeup of the combined company's executive roles, or if A-B InBev's name will change following the merger” during a call A-B InBev CEO Carlos Brito conducted with reporters, Brown reports. “The name of the company has not been something that has been top on our list,” Brito said. 

“Our joint portfolio of complementary global and local brands would provide more choices for beer drinkers in new and existing markets around the world,” Brito said in the release.

“Moreover, a combination of our two companies would allow us to make a greater and more positive impact on the communities in which we live and work, drawing on our shared commitment in this regard. It has long been our dream to build the Best Beer Company Bringing People Together For a Better World, and we believe this combination represents a step change for our business and our journey towards achieving that goal.”

It certainly will be a challenge getting that tagline into a 10-second Snapchat ad.

If yesterday’s deadline to complete the deal was missed — there had already been three extensions — A-B InBev would not have been allowed to make another approach for up to six months.

“Dubbed ‘megabrew’ by the drinks industry, capturing SAB gives A-B InBev a significant foothold in Africa, where it barely has a presence, while the takeover will also offer even greater dominance in Latin America,” Scheherazade Daneshkhu writes for Financial Times.

Meanwhile, SABMiller’s “planned sale of the stake in MillerCoors is designed to ‘promptly and proactively address regulatory considerations,’ the companies said,” Bloomberg’s Paul Jarvis and Thomas Buckley report. “MillerCoors represented the biggest antitrust hurdle to the merger, analysts have said, though SABMiller’s stake in China’s CR Snow may also need to be sold.”

Molson Coors will have ownership of the Miller brand portfolio outside of the U.S. and retain the rights to all of the brands currently in the MillerCoors portfolio for the U.S. market, including import brands such as Peroni and Pilsner Urquell, according to a release about the deal. The sale includes the global Miller brand currently sold in more than 25 countries, as well as related trademarks and other intellectual property rights.

Molson Coors CEO Mark Hunter called the deal “a game-changing opportunity for Molson Coors,” reports the Wall Street Journal’s Saabira Chaudhuri, who points out that MillerCoors last year generated $7.85 billion in sales, nearly double Molson Coors’s net sales of $4.15 billion.

“The Miller family of brands internationally — which includes Miller High Life, Miller Lite and Miller Genuine Draft — are particularly valuable to Molson in Canada, where its agreement with SABMiller to sell Miller brands recently came to an end, costing it more than $60 million in sales,” Chaudhuri observes.

“Together, A-B InBev and SABMiller will be the world’s largest consumer-staples company by earnings, according to Exane BNP Paribas analysts, who estimate the combined company will make $25 billion before interest, tax, depreciation and amortization in 2016,” Bloomberg’s Jarvis and Buckley write, and it will hold the No. 1 or No. 2 positions in 24 of the world’s 30 biggest beer markets.

Sante! — and all its global variations.

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