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Industryweek 9435 Beer

It's Takeover Time: Anheuser-Busch Makes Bid for Miller

Sept. 16, 2015
AB InBev is mulling a takeover of its largest rival, SABMiller, in a potential $245-billion marriage combining top beer brands Budweiser and Grolsch.

LONDON—The world's biggest brewer, Belgian-Brazilian giant AB InBev, is mulling a takeover of its largest rival SABMiller in a potential $245-billion marriage combining top beer brands Budweiser and Grolsch, the pair revealed Wednesday.

The sector is looking at consolidation faced with the increased popularity of  craft beers that are brewed by smaller independent firms.

AB InBev recently reported a sharp fall in second quarter profits owing to weak economic conditions in several markets, while Dutch beer giant Heineken bought half of US based beer maker Lagunitas, hoping to cash in on the global rocketing popularity of craft beers.

"The board of SABMiller notes the recent press speculation and confirms that Anheuser-Busch InBev... intends to make a proposal," said a statement from the British group.

AB InBev confirmed an approach had been made about a possible bid, but said there was "no certainty" of a deal. 

SABMiller shares rocketed by a fifth in value, while AB InBev closed up 6.41%.

SABMiller, the maker of Foster's, Miller and Grolsch beers, said its board "will review and respond as appropriate to any proposal which might be made."

AB InBev, which brews beers Budweiser, Corona and Stella Artois, was formed in 2008 by the merger of Belgian-Brazilian group InBev and U.S. brewing giant Anheuser-Busch.

Wednesday's announcement "has been a source of speculation since InBev first merged with Anheuser-Busch," said Jasper Lawler, an analyst at traders CMC Markets.

"There are still a few hurdles to get this deal further past the rumor mill; a bloated price tag in the region of $75-$100 billion (for SABMiller) and regulatory approval to name just two."

In a statement, AB InBev said it "confirms that it has made an approach to SABMiller’s Board of Directors regarding a combination of the two companies" but provided no details. 

At the close of trading Tuesday prior to the announcement, the two companies had a combined market value of 218.5 billion euros ($245.5 billion)

That value soared Wednesday, with SABMiller's share price closing up almost 20% to 3,614 pence in London trading.

Craft Competition 

Spiros Malandrakis, senior alcoholic drinks analyst at data research group Euromonitor International, said that “beyond the financial and cost savings side of such a potential deal", the industry was being forced to act because of increased competition from different tasting craft beers brewed around the world.

"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," he added.

SABMiller earlier this year bought London-based craft beer company Meantime for an undisclosed sum, as big players in a saturated beer market eye opportunities in the fast-growing segment.

"There is the flavour issue, but also a positioning issue, a distrust toward the big corporations since the big recession, the need to support local economies and to trace what you drink," Malandrakis to AFP when asked why craft beers were winning increased popularity, especially among younger generations.

Copyright Agence France-Presse, 2015

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