Five years after analysts and commentators saying the world’s two biggest beer companies — ABInBev and SABMiller — should merge, the companies are finally getting started on the deal.
But it won’t be easy. It’s the kind of merger that gets antitrust regulators excited.
ABI, which makes Budweiser, Corona and Stella, has about a 21% share of the global beer market, while SABMiller (behind Peroni and Fosters) has just under 10%, so a tie-up between the two would create a company that could control almost a third of the world’s beer.
Simon Hales and the Barclays beverages and tobacco team put together a handy map to show that, while the two companies don’t overlap too much geographically, the deal could hit antitrust trouble in the US and China:
Barclays sees SABMiller scaling back its 58% interest in Miller-Coors in the US and 49% stake in China Resources Enterprises in China to get the deal approved by regulators. The merger could mean SABMiller losing control of its iconic Miller brand.
Shares in brewing giant SABMiller, which makes Fosters and Peroni, surged 20% to £36 a share on Wednesday after the company confirmed that ABI is planning a bid.
But shares could be worth a lot more, as much as £48, Barclays says (empahsis ours):
Our lower-end scenario is £40. This is based on applying a similar % premium to the lower SAB share price vs June last year. Our upperend scenario is £48. This ties back to various media articles (see FT, 9 June 2014) which highlighted ABI was raising as much as $US60bn of debt to finance a deal for SAB.
Time for SABMiller shareholders to celebrate with something fizzy and alcoholic.
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