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Home | News | International | ABI looks to SABMiller

ABI looks to SABMiller

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On the clock: ABI faces 14th October deadline

The long rumoured bid by ABI finally comes to life

The long-standing suspected interest of the world's number one brewer, Anheuser-Busch InBev, in acquiring the world’s number two brewer, SABMiller, is now out in the open – and on the clock.

Responding to press speculation, SABMiller issued a statement Wednesday confirming that it has been informed by AB InBev that it intends to make a proposal to acquire SABMiller. No proposal has been received to date, nor does SABMiller have any details about what such a proposal may entail.

For its part AB InBev subsequently issued its own statement acknowledging SABMiller’s announcement and confirmed that it has made an approach to SABMiller’s Board of Directors about a combination of the two companies.

It added that, in effect, the future is unknown: “There can be no certainty that this approach will result in an offer or agreement, or as to the terms of any such agreement.” 

What Tuesday’s exchange does do is put a possible ABI bid on a deadline. As both parties noted, the UK’s Takeover Panel’s City Code on Takeovers and Mergers requires that AB InBev must, by not later than 5.00 p.m. on Wednesday 14 October, 2015, either announce a firm intention to make an offer for SABMiller or announce that it does not intend to make an offer for SABMiller.

Should ABI make a bid for SABMiller and be successful, the combination of the two companies will create a brewing world leader with a sizable scale advantage over its competitors. Assuming that any combination will require ABI to divest its 57% stake in MillerCoors, its US joint venture, the resultant company still will produce around 615 million hectolitres of beer annually. 

That total more than triples that of what would become the world’s second ranked brewer, Heineken, with volumes of approximately 180mhl annually; and third ranked Carlsberg with 135 to 140mhl annually. 

But there will be potentially numerous regulatory objections in markets around the world in addition to the United States, as well as SABMiller shareholders to convince that an ABI led company would provide better value. 

And there’s also the upfront price tag to consider against possible long-term returns, the total of which increased sharply today when shares in SABMiller rocketed upwards in London by almost 20%, increasing the market capitalisation to £58.5 billion.

So the stage is set for what will be the biggest ever – and potentially last – significant M&A activity in the global brewing industry. For a combination of AB InBev – SABMiller would be of a size and competitive strength that it’s impossible to imagine a subsequent bid that would dismantle such a complex, vibrant company. 


 

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