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It’s happening: AB-InBev to acquire SABMiller

The $107 billion dollar deal will create a company that produces one in every three beers consumed globally.
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Courtesy of Anheuser Busch-InBev

Courtesy of Anheuser Busch-InBev

As expected, news broke this morning of Anheuser-Busch InBev’s purchase of SABMiller, creating the world’s largest beer company. The $107 billion dollar deal will likely close in the second half of 2016, according to AB In-Bev. To comply with antitrust laws, the new company (alphabet soup acronym pending) will sell its majority share in MillerCoors to Molson Coors for an estimated $12 billion.

The deal forms a megabeer company with massive global influence that is expected to brew one in every three beers consumed globally. AB In-Bev found MillerCoors attractive for a few reasons; namely, the acquisition allows the new company to expand its footprint in developing beer markets like Africa, Asia and Central and South America, according to an AB In-Bev statement. SABMiller has its origins as South African Breweries, founded in 1895, and though that company is currently based in London, its African footprint spans more than 17 countries (that number expands to 38 if SABMiller’s associated interests in the Castel group’s African beverage businesses are included), with additional bottling operations for the Coca-Cola company in 23 African markets.

What this all means for U.S. beer drinkers remains to be seen. A Department of Justice investigation of AB In-Bev‘s purchases of wholesalers is ongoing, which probably has a greater impact on American consumers than what the new AB-InBev/SABMiller company will bottle and sell in Africa.

Midday today, Brewers Assocation CEO Bob Pease issued a statement regarding the merger.  He writes: “The size and scope of the ABInBev business has many ramifications for the U.S. beer industry, even with the divestiture of the MillerCoors joint venture.  The most obvious is that ABInBev is still by far the largest brewer and beer distributor in the United States.  It is vital for the continued success of small brewers that we have access to market with an independent and competitive middle distribution tier.” He goes on to bring up what’s probably most germane for American craft breweries: access to ingredients, distribution channels and the combined company’s gigantic purchasing power: “Over time, ABInBev will have significant new global revenues to invest in the United States if it chooses to do so as a result of this acquisition.  The MillerCoors operation will undergo significant changes.  ABInBev’s new international footprint and scale give the company greater influence over commodities used in brewing and many other facets of the beer industry that could affect competition in the U.S. market.” He ends by urging antitrust authorities to closely scrutinize the deal in the coming days.

Editors’ note: This story was updated on Nov. 11, 2015 to include the Brewers Association statement.

 

Author
Kate Bernot is DRAFT’s beer editor. Reach her at kate.bernot[at]draftmag.com.

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