The first superbrewer may be on its way
Colin Joliat There have been rumors, discussions, and concerns for the past year about the possibility that AB-InBev might buy SABMiller. This would unite the two largest brewing companies in the world. If recent stock market action is any indication, the acquisition may finally be happening.
At the close of the London Stock Exchange today, SABMiller had gained 7.05%, mostly based on a claim out of Brazil that a deal was in the works for in the neighborhood of $80 billion. While the speculators have been known to be wrong on more than one occasion, this very well could signal that a deal is actually in the works. The main hurdle would then be to clear any antitrust concerns. While it may seem that a merger of the two biggest brewing companies would create an obvious violation, the two giants are actually much more complimentary than they are competitive. The main areas of concern will be China and the US.
While SABMiller has a very large emerging market presence, the majority of AB-InBev’s revenues come from North America. This acquisition would give them easy access to those emerging markets while not having to do the legwork themselves. The issue in the United States, however, would be that (S)AB-InBev-Miller would then own at least part of all but one of the top 10 selling domestic beer brands. I realize that may sound a bit confusing, so I drew these handy graphs for you. No, I didn’t scientifically plot the circles to the exact market share, but you get the picture.
Without any concessions, 80% of the US beer market would be controlled by one company, and the DOJ would never let a deal like that go through. What is most likely to happen is that the (S)AB-InBev-Miller sells its stake in MillerCoors to co-owner Molson Coors. This would take the Miller line out of the super brewer’s hands in America. While that may seem like a big piece to give up, you have to remember that AB-InBev isn’t trying to increase their control over the US market. They are content with their action in the States, but are looking to increase their footprint around the world.
What are the effects for you? It doesn’t appear as thought there will be many. There will still be fierce competition in the domestic beer market between Budweiser and Miller/Coors, so you don’t have to worry that your favorite frat pack will be going up in price. One upside could be putting AB-InBev’s giant US distribution network to use for some of SABMiller’s excellent imported beers. It is still yet to be seen if a deal is actually coming, but it wouldn’t surprise me in the slightest to see it get done. I, for one, welcome our new brewer overlords.
More info here.
comment on this story
blog comments powered by Disqus