Anheuser-Busch InBev's takeover of SABMiller to realign global beer industry
Anheuser-Busch InBev's plan to acquire SABMiller Plc is expected to change the business dynamics in the global beer industry. Anheuser-Busch InBev is a multinational beverage and brewing company's takeover is considered to be the largest one this year and fourth largest takeover in the corporate history. Anheuser-Busch InBev is acquiring SABMiller for $104.2 billion.
The combined power of world's two largest brewers may pave the way for increasing beer prices for in the global market.The year's biggest deal will also realign the global beer industry influencing all the manufacturers of beer to redraw their business strategies. The deal is awaiting regulatory approval.
The acquisition deal to acquire SABMiller would create a dominant position for Anheuser-Busch InBev in the global industry. Headquartered in Leuven, Belgium, Anheuser-Busch InBev SA/NV will emerge as world's largest brewery with a 30 percent market share after the acquisition.
After the acquisition, the combined entity is poised to generate $64-bn revenues leaving its closest rival Heineken NV far behind, according to Plato Logic, a tracker of the beer industry. Anheuser-Busch InBev is waiting for the approval from the regulator.
The portfolio of Anheuser-Busch InBev will include six of the global top-10 namely Bud Light, Budweiser, Skol, Harbin, Brahma and SABMiller's Snow, according to Euromonitor International.
The titanic deal requires extensive regulatory scrutiny considering the huge size of the combined entity and its dominant position in several nations including the US. Investors, funds and private equity (PE) firms are also keenly watching the scenario.
For instance, Brazilian investment firm 3G Capital is in discussions with Santo Domingo family, which owns 14 percent in SABMiller. 3G Capital was behind the formation of Anheuser. The Columbian family Santo Domingo has also stakes in 3G Capital.
Four years ago, Belgian-Brazilian company InBev bought St. Louis-based Anheuser-Busch and it was the biggest deal in beer industry. The combined entity of Anheuser-Busch InBev is again making the largest ever deal in the beer industry by offering to acquire SABMiller.
After the acquisition Anheuser-Busch InBev will become an alcohol beverage behemoth as it will account for one-third of global beer production and 70 percent market share in the US alone. Beer industry analysts raise their eye brows on the outcome from regulators in approving such major deal that gives dominance over the global beer industry.
The deal would also require the company to offload some parts of operations in US and most likely in China also. After this also it will have fair market share across the world. The expected market share would be 46 percent in the US, 57 percent in Mexico, 33 percent in Africa, 63 percent in Brazil and 62 percent in rest of Latin America.