LONDON – The world’s two biggest brewers could be joining forces after Anheuser-Busch InBev, the maker of Budweiser, Corona and Labatt’s products, said Wednesday it has made a takeover approach to SABMiller PLC, the owner of Miller Genuine Draft and Peroni.
While no specific offer has yet been made, SABMiller stock rocketed 22 per cent higher on the news. That indicates investors expect the deal to value the company at around $90 billion. Shares of AB InBev rose seven per cent.
The combined company would be the largest brewer in the world by a large margin. That could potentially draw objections from regulators worried the deal might stifle competition and lead to higher prices for consumers.
“AB InBev’s intention is to work with SABMiller’s Board toward a recommended transaction,” the Belgian company said in a statement. “There can be no certainty that this approach will result in an offer or agreement, or as to the terms of any such agreement.”
The beer industry has seen years of consolidation as brewers seek to sustain growth amid changing tastes that have seen consumers gravitate toward craft beers and wine. AB InBev and SABMiller are themselves products of this combining trend.
SABMiller became the world’s second-biggest brewer in 2002, when South African Breweries took over Miller Brewing Co., based in Milwaukee, Wisc.
SABMiller recently formed a Canadian subsidiary after ending a long partnership with Molson Coors — a combination of beer multinational makers headquartered in Montreal and Denver, Colo.
In the United States, MillerCoors — a joint venture formed in 2008 — is the country’s second-largest beer company, capturing nearly 30 per cent of U.S. beer sales. There’s some expectation that SABMiller may be required to divest its stake in MillerCoors if the AB ImBev takeover goes through.
Buying SABMiller would strengthen AB InBev’s position in fast-growing economies in Africa and Asia. SAB Miller employs about 69,000 people in more than 80 countries, from Australia to Zambia, Colombia and the Czech Republic.
The company, now based in London, said Wednesday that it “would review and respond as appropriate to any proposal which might be made.”
AB InBev was created in 2008 when Brazilian-Belgian brewer InBev bought U.S. icon Anheuser Busch Cos. The company has operations in 25 countries and makes more than 200 beers, including Stella Artois and Beck’s.
SABMiller sold 324 million hectolitres (8.56 billion gallons) of lager, soft drinks and other alcoholic beverages in the year ended March 31, generating group net producer revenue of $26.2 billion. AB InBev, by contrast, sold 459 million hectolitres and had revenue of $47.06 billion.
Under U.K. takeover rules, AB InBev has until 5 p.m. on Oct. 14 to make an offer for SABMiller or walk away.