One of the final hurdles for biggest beer deal almost cleared
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Anheuser-Busch InBev’s $107bn acquisition of SABMiller is nearing Chinese approval after the companies agreed to divest the maker of Snow beer, the world’s top-selling brand, according to people familiar with the matter.
Approvals for both transactions could come as soon as this month based on typical review timelines, clearing one of the final hurdles for the biggest beer deal in history.
Though China’s Ministry of Commerce may attach some conditions to the deal, including the Snow divestiture, regulators see no major hurdles, said one of the people, asking not to be identified because the deliberations are private. Some local beermakers told the ministry that they don’t object to the takeover as it won’t have a big impact on the Chinese market, another person said.
SABMiller shares closed up 3 pence to £43.06 in London, erasing an earlier decline. AB InBev shares fell less than 1% to €114.95 in Belgium.
The merged company would redraw control of the global beer market. Following divestitures, the deal will keep Budweiser, Beck’s and Stella Artois under AB InBev’s roof, while ceding control of brands including Miller in the US and Peroni and Pilsner Urquell in Europe.
In China, the companies agreed to sell SABMiller’s 49% stake in its joint venture with China Resources Beer, which controls Snow beer, back to its partner.
Deals unravelled
“In China, the companies agreed to sell SABMiller’s 49% stake in its joint venture with China Resources Beer, which controls Snow beer, back to its partner.”
In clearing these global hurdles, the beer megadeal contrasts with other big proposed tie-ups that unravelled amid antitrust scrutiny, including Halliburton’s failed bid for Baker Hughes, Staples’s foiled merger with Office Depot and General Electric’s decision to abandon the sale of its appliance business to Electrolux. In the beer deal, the sides were aggressive in offering divestitures from the start — including the plan for SABMiller to sell Snow — which may have ultimately helped reduce regulatory resistance, antitrust lawyers have said.
The US Justice Department may clear the tie-up as soon as this month, people familiar with the process have told Bloomberg News. SA has yet to bless the deal, which has hit some obstacles amid protests from local unions.
AB InBev and SABMiller declined to comment. China Resources and the commerce ministry didn’t immediately respond to queries.
The merger plan, which the two companies reached in November as a way to gain access to emerging markets, has already won antitrust approval in more than a dozen jurisdictions, including the European Union.
In March, China Resources announced it would buy out SABMiller’s stake in their Chinese venture for $1.6-billion. That deal is also nearing approval from China’s commerce ministry, the people said.
In the US, AB InBev has agreed to sell SABMiller’s stake in the MillerCoors joint venture. It may also have to agree to further conditions related to beer distribution, according to people familiar with the matter. Smaller brewers and wholesalers want officials to restrict AB InBev’s control and influence over how beer gets on to store shelves, according to the people.
Questions & Answers
Q.What is the primary condition China's Ministry of Commerce may attach to the deal?
What is the primary condition China's Ministry of Commerce may attach to the deal?
The ministry may attach conditions such as the divestiture of Snow beer. Regulators reportedly see no major hurdles, though some conditions are expected before approval is granted.
Q.Which major brands will remain under AB InBev's control after the divestitures?
Which major brands will remain under AB InBev's control after the divestitures?
Following the divestitures, AB InBev will retain control of brands including Budweiser, Beck's, and Stella Artois. Other brands like Miller, Peroni, and Pilsner Urquell will be ceded.
Q.Why did other proposed large business tie-ups unravel compared to this beer deal?
Why did other proposed large business tie-ups unravel compared to this beer deal?
Other proposed tie-ups, such as Halliburton's bid for Baker Hughes, unravelled due to antitrust scrutiny. In contrast, the beer deal's sides were aggressive in offering divestitures early on.
Q.What additional conditions might AB InBev face in the US related to the deal?
What additional conditions might AB InBev face in the US related to the deal?
AB InBev has agreed to sell SABMiller's stake in the MillerCoors joint venture. It may also need to agree to further conditions regarding beer distribution, influenced by smaller brewers and wholesalers.