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AB InBev Said to Plan 5,500 Job Cuts After SABMiller Deal

Aug. 26, 2016
The job cuts will form part of the $1.4 billion of annual savings that AB InBev has said it’s seeking from the takeover, equivalent to almost a tenth of SABMiller’s $15 billion in annual revenue.

Anheuser-Busch InBev NV (IW 1000/87) expects to cut about 3% of its enlarged workforce in the three years after its takeover of SABMiller Plc as it seeks to maximize savings from the combination of the world’s largest brewers.

The reductions will be implemented gradually and in phases, the companies said in documents related to the acquisition published Friday. About 5,500 positions are likely to be eliminated, according to a person with direct knowledge of the matter, who asked not to be identified because the information is private.

The job cuts will form part of the $1.4 billion of annual savings that AB InBev has said it’s seeking from the takeover, equivalent to almost a tenth of SABMiller’s $15 billion in annual revenue. Brewers of mass-market beer are trying to cut production and distribution costs as they lose market share to smaller independent brands in Europe and North America. SABMiller last year doubled its own savings target to $1.05 billion by 2020.

The level of savings that AB InBev is seeking from its combination with SABMiller is less than in some previous deals. It achieved cost reductions representing about 16% of sales when it bought both Anheuser-Busch Cos. in 2008 and Mexico’s Modelo in 2013.

“AB InBev is known for running their breweries very efficiently and their front-of-office very efficiently,” Javier Gonzalez Lastra, an analyst at Berenberg, said by phone. “They will do the same as they did at Modelo, where they found that the job that was being done at AB InBev by two people was being done by four.”

AB InBev shares rose 0.6% to 112.50 at 11:56 a.m. in Brussels.

The world’s largest brewer said the estimate for job cuts doesn’t include areas such as sales, where it hasn’t made advanced plans for integration due to regulatory restrictions. The company said SABMiller’s head office will be integrated into its headquarters in Leuven, Belgium, and management office in New York.

By Thomas Buckley

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