Two giants of the global brewing industry, SABMiller and Anheuser-Busch InBev, may finally be bowing to the new realities of the business—including slow-growing traditional brands and gains by craft beers—and merging their brands and assets.
Sounds like it’s time for the “King of Beers” to get cozy with “Tastes Great, Less Filling.” Or maybe not.
Antitrust regulators could intervene to prevent such a love-fest among the brands and characters owned by SABMiller and Anheuser-Busch, ranging from legendary sportscaster Bob Uecker’s favorite brew, Miller Lite, to the Clydesdales’ Budweiser.
The combination would create an entity with total annual sales of $55 billion, nine of the world’s top 20 beers by volume, about 30 percent of the world’s beer market and around 70 percent of the action in the US.
Such a long-speculated combination would also represent the biggest merger in brewing history and could rank among the top 10 takeovers of all time, according to Dealogic and EY.
Specifically, SABMiller confirmed today that AB InBev “has informed SABMiller that it intends to make a proposal to acquire SABMiller.” It cautioned that no deal was certain. For its part, AB InBev soon followed with its own statement, saying it intends “to work with SABMiller’s board toward a recommended transaction.”
London-listed SABMiller makes more than 200 beers including, of course, Miller High Life and Miller Lite in the US as well as Pilsner Urquell and Grolsch, and operates across six continents. Belgium-based AB InBev makes Budweiser and Bud Light and is the world’s largest brewer by market share, with 155,000 employees in 25 countries.
If their attempts to merge go forward, the move would trigger what the Journal called “an intense antitrust review around the world.” AB InBev already has about 45 percent of the US market, and MillerCoors, in which SABMiller owns a 58 percent economic stake, has around a 25 percent US market share.
Analysts were quick to suggest that regulators might require the merged company to divest the chunk of MillerCoors, and a likely buyer might be Molson Coors, which owns the other 42 percent of MillerCoors. The Denver-based brewer of Coors Light and Molson Canadian has the right to increase its MillerCoors stake to 50 percent if SABMiller is acquired and, the Journal said, hasn’t ruled out increasing its stake in the past.