1 month ago financialpost.com
However, deal would mostly apply to foreign markets. AB InBev wouldn't be allowed to add MillerCoors in the US.
With half the world’s beer produced by four big firms and few markets left for them to tap, the time may be right for a US$100-billion merger between the two largest, Anheuser-Busch InBev and SABMiller.
This mega-deal is tipped by analysts as the most likely tie-up because of the other two, Heineken is family controlled and Carlsberg is protected by a trust.
Talk that AB InBev might buy SABMiller is not new, but it paused in June 2012 when the former announced a $20.1 billion deal to take over Mexican brewery Grupo Modelo.
Now, with AB InBev planning to return to a comfortable pre-deal debt-to-EBITDA ratio of below two next year, industry experts are betting on a combination of its Budweiser and Stella Artois brands with SABMiller’s Peroni and Grolsch. Some expect a deal within a year.
“It’s more a question of when, not if,” said a banker who has worked on drinks deals. Others, also speaking on condition of anonymity, cited AB InBev’s record as a serial acquirer and the need for a target to match or surpass its US$52 billion purchase of Anheuser Busch in 2008.
AB InBev is market leader in North America, Mexico and Brazil. SABMiller would give it smaller Latin American markets such as Colombia and Peru, as well as Africa, where SAB began selling beer in 1895 to Johannesburg prospectors used to drinking raw potato spirit mixed with tobacco juice and pepper.
Other industry executives think it is shortsighted to limit AB InBev’s and its rivals’ ambitions to beer alone.
Speculation over whether AB InBev would buy PepsiCo’s drink business, or at least part of it, has grown recently as activist investor Nelson Peltz pushes for PepsiCo to buy Cadbury chocolate maker Mondelez International, making it more likely that the drink business could be sold.
AB InBev has almost half of the U.S. market and would not be allowed to add SABMiller’s quarter share, held through the MillerCoors joint venture with Molson Coors. Selling the Miller stake is the obvious fix, although Molson would be the only realistic buyer and so not forced to pay top dollar.