SABMiller Might Be Too Late to Stop AB InBev

The big news in the world of beer is a report in the Wall Street Journal on how Anheuser-Busch InBev is looking for financing to purchase its chief rival, SABMiller, in a deal estimated to be worth $122 billion. The combined company would control 29 percent of the world’s beer industry, according to Euromonitor.

There’s one significant wrinkle in this developing story: SABMiller is an unwilling acquisition target. In fact, as Bloomberg reports, SABMiller is courting Heineken, the family-owned brewer responsible for 9 percent of the global market, to make the attempted swallowing by AB InBev all the more difficult. There are limits to what regulators will allow. The question is, why didn’t SABMiller act sooner? Analysts have been predicting for years that AB InBev would come after its chief competitor.

This is what AB InBev does. It’s more of a mergers-and-acquisitions firm than a traditional beer company. AB InBev itself is the offspring of several mergers, starting in 1989 when a group of Brazilian investment bankers led by Jorge Lemann bought a local brewer called Brahma for $60 million and went shopping for its competitors. They snapped up Brazil’s Antarctica, forming Ambev, which they combined with Belgium’s Interbrew in 2004. The result was InBev, the brewing juggernaut that devoured Anheuser-Busch in a $52 billion hostile takeover in 2008.

Analysts say that AB InBev would have to get rid of SABMiller’s Miller Coors business in the U.S. to get the latest deal approved by antitrust regulators. But that’s very doable: Molson Coors Chief Executive Peter Swinburn has said he would be interested in acquiring the joint venture if it were for sale, and now he may get his chance.

SABMiller’s defense isn’t working—Heineken immediately rejected its offer—and the price of AB Inbev’s shares has been rising on Monday in a sign that Wall Street likes the idea of the beer megamerger. Unless SABMiller can persuade Heineken to change its mind, the smaller beer giant may have to go to AB InBev’s big gulp.

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