AB InBev Deal Worth $104 Billion

By Geoffrey Thomulka,  
Money & Investing Writer

Anheuser-Busch is a well-known beer brewer in most world markets.

It is evident that they want to be the best brewer in the world.

AB Inbev, the parent company to household brands like Budweiser and Corona, finally settled on a deal which would allow them to acquire SABMiller, another beer giant best known for Fosters and Blue Moon.

Ab Inbev and SABMiller have been fierce competitors in the beer market for years and news of a potential acquisitions comes as quite surprising.

The deal is reportedly worth $104 billion. This acquisition would create a mega brewery, with combined sales well north of $55 billion.

AB Inbev has tried to buy SABMiller a few times.

SABMiller has been reluctant to accept a deal, but the fourth offer was one they could not refuse.

If the deal were to substantialize, this giant beer brewery will be responsible for producing nine out of the top twenty beers consumed and purchased by volume.

Many experts on the matter are unsure the deal will be approved by the government due to antitrust laws.

The main concern is that the combination of these two giants would create a monopoly in the world beer markets, resulting in an increase in beer prices.

If approved, it will be one of the top five largest acquisitions of all time, perhaps the largest ever in the beer industry.

SABMiller is interested in the deal and they are giving indications that they will encourage their shareholders to approve the deal.

There was some opposition to the deal, but in the end, the board of directors was able to get the shareholders on board to support the deal.

If the deal were to not go through, which is a distinct possibility given US Antitrust laws, AB Inbev would have to pay a $3 billion breakup fee.

AB Inbev claims that the acquisition will help them corner market share.

With the arrival of craft beers, popular beer brands have to stay vigilant to keep their customers. Many Americans are making the switch to drink craft beers made by private brewers and ditch the popular cheap brands.

It is possible that small beer distributors will be forced to shut down operations because they cannot keep up with the demand for the other beers.

One thing that may tie the deal up is one of the majority shareholders of SABMiller.

The Santo Domingo family owns 17 percent of the company and has a major say in its operations.

Early reports indicate that they are hesitant to go through with a deal because they are worried about stock price.

The negotiators on both sides are working to make the new share price for the Santo Domingo enticing enough for them to approve a deal.

Until this happens, the may come to a halt. Once the family commits to the acquisition, the boards can go ahead and have the government approve the acquisition.

If it were approved, the formation of one of the largest, highest grossing companies in the world will come into existence.

A version of this article appeared in the Tuesday, October 20th print edition.

Contact Geoff at
geoffrey.thomulka@student.shu.edu

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