It’s a move that would combine the world’s two biggest beer makers into a global brewing powerhouse: Anheuser-Busch InBev confirmed today it has approached rival SABMiller about a possible takeover.
A thorough antitrust review is a given, experts say. The deal would bring two of America’s best-loved beers, Bud Light and Miller Lite, under the same ownership after generations of fierce competition for market share. It also would unite some of the world’s biggest brands: AB InBev brews Corona and Stella Artois; SABMiller brews Peroni, Pilsner Urquell and Foster’s.
“Due to antitrust, AB InBev will have to divest its share of its joint venture with Molson Coors Brewing Co. in the U.S.,” said William C. Finnie, adjunct professor of strategy at Olin Business School at Washington University in St. Louis. “Antitrust may also force divesture of some brands in China and other countries.
“The deal is very similar financially to InBev’s 2008 acquisition of Anheuser-Busch.”
Finnie, who directed market analysis and strategy at the former Anheuser-Busch from 1965 through 1991, also said if the proposed merger goes through, SABMiller can expect the very large cost reductions Anheuser-Busch experienced after the InBev takeover.
“SABMiller is worth a lot more to AB InBev than as an independent company,” Finnie said. “It will slash corporate overhead costs and use its larger size to cut operating costs significantly. They are world-class cost cutters, as everyone recognizes.”
Stock shares in both brewers were up when the news of the proposed merger was announced. If it goes through, the resulting mega-brewery would be worth an estimated $275 billion.