Breaking News

AB InBev-SABMiller Merger OK'd In UK, To Close On Oct 10

By Zacks Investment ResearchStock MarketsOct 04, 2016 10:58PM ET'd-in-uk,-to-close-on-oct-10-200157294
AB InBev-SABMiller Merger OK'd In UK, To Close On Oct 10
By Zacks Investment Research   |  Oct 04, 2016 10:58PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items

The mega-merger of the Belgian-American Anheuser-Busch InBev SA/NV (NYSE:BUD) , alias AB InBev, and the Anglo-South African SABMiller (LON:SAB) plc (OTC:SBMRY) has finally cleared all hurdles. The last in the line was the approval of the High Court of Justice in England and Wales regarding the scheme of arrangement for implementation, which was approved on Oct 4.

With the merger now ready to take-off, AB InBev revealed that the first step towards the execution of the merger agreement is delisting of SABMiller shares on the London Stock Exchange, effective Oct 5.

AB InBev expects to close the acquisition on Oct 10, almost a year after the deal was originally proposed. The new company will retain the AB InBev banner and SABMiller will cease to trade under its current name in the U.S., starting Oct 11.

The Background

AB InBev and SABMiller had reached an agreement to create the “first truly global beer company,” back in Oct 2015. After clearing all regulatory hurdles in August, AB InBev and SABMiller received unanimous support from its shareholders for the deal worth at over $100 billion on Sep 28, thus clearing a major roadblock for the big beer merger. The deal gathered votes from a larger-than-required margin as 95.5% of SABMiller’s shareholders supported the takeover. However, approval from only 75% shareholders was needed, excluding the company's two largest stakeholders – U.S. tobacco company Altria Group Inc. (NYSE:MO) and Colombia investor group Bevco.

Altria and Bevco, which together hold a 41% stake in SABMiller, had previously given their nod to the deal against a separate cash-and-stock offer from AB InBev and as was approved by the U.K. Scheme Directions Hearing on Aug 22.

What the Mega-Brew Merger Has in Store?

As this massive takeover nears completion, it would be right to evaluate who gains what out of the deal and where the brewing industry is headed from here. The deal is likely to lay foundations to a mega-brewing company that will control about one-thirds of the global beer market, leaving behind Heineken NV (OTC:HEINY) , which holds about an 11% market share of the industry. Moreover, it will expand the company’s share in the global beer profits and worldwide volumes, growing to nearly 46% and 27%, respectively. This means that the new entity’s share in global beer profits will grow four folds, and its volumes will double that of Heineken.

Further, it will fortify AB InBev’s presence globally, lowering its reliance on the mature U.S. and struggling Brazilian markets, while gaining exposure to 17 African countries and the fast-growing Latin American markets, such as Colombia and Peru. The takeover comes at an opportune time for AB InBev as it is struggling to revive its Budweiser brand in the U.S. – its largest market, and continues to face an economic downturn in Brazil – its second-largest market.

As for the industry, this merger is going to be a one-off event as it is probably going to change the face of the beer industry. Apart from being mutually beneficial, the deal should benefit many rival brewers who got their hands on the portions of SABMiller that AB InBev was forced to sell-off in order to back regulatory approvals in various countries. For this, the company sold SABMiller brands including Miller Lite, Peroni and Snow, which are among the world’s leading beer brands.

Further, in a bid to please U.S. regulators, AB InBev disposed SABMiller’s 58% stake in its joint venture MillerCoors LLC to Molson Coors Brewing Co. (NYSE:TAP) for $12 billion. This will make Molson Coors, which previously held a 42% stake in MillerCoors, the major stakeholder in the joint venture. Additionally, this will lift Molson’s ranking amid the world’s most-profitable brewers from fifth to third, according to analysts. Further, this will make Molson the second-largest brewer in the U.S. with a 25% market share.

Thus, this deal is expected to benefit the entire brewing industry as it has bolstered the position of many rivals, making competition tough for AB InBev itself. However, we believe the combined entity will be strong enough to handle competition from these rivals with a portfolio of brands including leading names like Budweiser, Stella Artois, Corona and Castle Lager.

AB InBev currently holds a Zacks Rank #2 (Buy), while SABMiller carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Confidential from Zacks

Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>

MOLSON COORS-B (TAP): Free Stock Analysis Report

ANHEUSER-BU ADR (BUD): Free Stock Analysis Report

SABMILLER PLC (SBMRY): Free Stock Analysis Report

ALTRIA GROUP (MO): Free Stock Analysis Report

HEINEKEN NV (HEINY): Free Stock Analysis Report

Original post
AB InBev-SABMiller Merger OK'd In UK, To Close On Oct 10
AB InBev-SABMiller Merger OK'd In UK, To Close On Oct 10

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email