Confirmation of a likely bid came from SABMiller’s board following mounting speculation over recent years about the move. The news bolstered SABMiller’s share price which, according to reports traded over 20% higher in London after the news emerged.
In a statement acknowledging the interest of its rival, the board said: “No proposal has yet been received and the board of SABMiller has no further details about the terms of any such proposal.”
AB InBev’s biggest shareholder, Brazilian private equity group 3G, owns around 40% of the share capital. 3G Capital has also been behind takeovers of Burger King, Heinz and Kraft Foods.
World’s largest brewer
AB InBev is the world’s largest brewer with a portfolio of around 200 beer and malt beverage brands, including Budweiser, Corona, Stella Artois, Beck’s, Leffe and Hoegaarden. The company operates in North America, Latin America, Europe and the Asia Pacific with market-leading positions in the US, Brazil and Mexico. It has been built up through a series of deals, orchestrated by 3G partners.
SABMiller, the world’s number two brewer, which employs 68,000 people around the world and is traded on the London Stock Exchange, has a South African heritage dating back to 1886. It is best known for its Grolsch and Peroni beer brands. While its share price hit £36.20 at one point, at the time of going to press this had fallen back to £35.66. The company is led by Alan Clark, a South African who has been chief executive for around two years, but has been with the company for over 25 years.
According to city broker Hargreaves Lansdown, if the merger goes ahead it would create a clear number one global alcoholic beverage giant, with dominant market positions in Latin America, Africa, the US and large swathes of Europe. Given the size of the two companies and overlapping exposures in multiple countries (including the US), AB InBev would have to agree to a series of divestitures to obtain regulatory approval.
Deadline for formal offer
The Guardian reported that SABMiller’s 58% stake in MillerCoors would be likely to be sold off to Molson Coors, whose share price also jumped in anticipation of a deal. Under UK takeover rules, AB InBev has until October 14 to make a formal offer.
The Independent reported that AB InBev and other top brewers were trying to move into new markets in order to shrug off weakness in North America and Europe, where consumers were opting for craft beers made by independent players or wine or spirits.
According to the Financial Times, such acquisition opportunities are rare. It reported that of the next three largest brewers after AB InBev, namely SABMiller, Heineken and Carlsberg, SABMiller was the only one potentially available for sale. It noted that Heineken was family-controlled and had rebuffed a merger approach from SABMiller last year, while Danish brewer Carlsberg was protected by a foundation.