The proposed takeover would create a nearly quarter-trillion dollar behemoth. We'll see if this deal passes muster with antitrust review.
The combined entity would control, what, 70%, 75% of the market? Given the FTC's lax enforcement (one might even call it laissez-faire...) in areas where monopolies could really mess the country up banking, the news media, etc. I have a hard time imagining that this would be the straw that broke the camel's back.
The combined entity would control, what, 70%, 75% of the market? Given the FTC's lax enforcement (one might even call it laissez-faire...) in areas where monopolies could really mess the country up banking, the news media, etc. I have a hard time imagining that this would be the straw that broke the camel's back.
Scary as it sounds, I think it would probably be good news for craft beer. I mean, we've got two huge, lumbering corporate giants, too slow and fossilized in their bureaucratic ways to adapt to a world that's passing them by and dying a death of a thousands cuts inflicted by smaller, more nimble competition. Uniting into an even larger, even slower entity that will suffer years of inefficiency and strife before the two corporate organizations are smoothly merged doesn't seem like a particularly good cure for what ale's 'em.
How would the FTC prevent a company based out of Belgium from buying a company based out of London?
doesn't seem like a particularly good cure for what ale's 'em.
AB InBev Wins U.S. Antitrust Approval for SABMiller
Posted July 20, 2016, 01:47 P.M. ET
By David McLaughlin
Anheuser-Busch InBev NV won U.S. antitrust approval for its takeover of SABMiller Plc, after the maker of Budweiser agreed to give up ownership of the Miller brand and open the door to greater competition from craft beers.
AB-InBev will sell SABMillers stake in MillerCoors LLC and refrain from practices that restrict distribution of smaller, competing brands, according to a court filing July 20 in Washington.
The agreement to allow the brewing juggernauts to combine runs counter to the governments moves against other big deals in the past yearthe Justice Department and the Federal Trade Commission have killed proposed tie-ups in the cable, office supplies and oil drilling industries, among others. In this case, the companies proposed asset sales from the start that resolved antitrust officials concerns that the deal would harm competition.
While we continue to believe that the merger of the worlds two largest brewers is bad for both the beer industry and consumers, the DOJs significant requirements, including the termination of incentive programs such as the Voluntary Anheuser-Busch Incentive for Performance Program (VAIP), a cap on ABIs self-distribution volume and other measures to protect distributor independence, appear to address some of our major apprehensions with the merger. With effective enforcement of these provisions, small brewers can rely on their independent distributor partners to access the market. This will help ensure that beer enthusiasts can continue to enjoy a vast variety of options from the more than 4,600 breweries in the U.S.
July 27 — AB InBev's $103.6 billion takeover bid for SABMiller Plc was thrown into disarray after the target company suspended integration of the two brewers following a rebellion from shareholders who feel they haven't been compensated enough for the pound's recent plunge.
SABMiller managers asked employees to halt work knitting together the two companies, with Chief Executive Officer Alan Clark saying in an internal memo that “there should be no contact with AB InBev with immediate effect.” Advisers continue to work on the transaction, and SABMiller's board hasn't decided to walk away from the deal as it reviews an improved offer from AB InBev, people familiar with the matter said. The brewers declined to comment on the memo reviewed by Bloomberg News.
What looked like a done deal just weeks ago has morphed into a battle pitting the world's biggest brewer against SAB investors who oppose terms they say withered since the U.K. voted last month to leave the European Union. While AB InBev nudged up its bid July 26, some shareholders remain opposed—raising further questions over completion of an industry-transforming transaction affecting companies from the U.S. to Africa to Asia.
“It suggests that they think that the risk is real that shareholders won't approve this,” said Philip Gorham, an analyst at Morningstar Inc. “We don't know at this stage if the deal will close. It's an unexpected wrinkle.”
According to the memo, so-called convergence planning is on hold, and all meetings and calls between the companies should be postponed until further notice while management reviews the latest proposal. According to the memo, the same applies to contact with representatives of Asahi Group Holdings Ltd. and Molson Coors Brewing Co., both of which are buying assets from the brewers as part of the deal.
Two-Pronged Plan
At the heart of the confrontation is a complex two-pronged takeover proposal designed to please both small and institutional investors as well as SAB's two biggest stakeholders, Altria Group Inc. and Bevco Ltd. Those two parties were granted a cash-and-stock option, whose value has soared from 39 pounds when the deal was announced last year to about 50 pounds, while the all-cash bid hasn't benefited as much.
AB InBev sought to address the mismatch on July 26 by raising the cash bid to 45 pounds a share, 1 pound more than the prior offer. It also increased the amount of cash in a cash-and-stock alternative.
Still, some shareholders remain on collision course. SABMiller holder Aberdeen Asset Management said even the revised proposal undervalues the company and is unacceptable because stockholders are receiving different treatment. All told, the bid is valued at 79 billion pounds, making it the biggest takeover approach in the brewing industry.
AB InBev's bid has already received regulatory clearance from South Africa and the U.S. in recent weeks. Part of the approval process includes a complex set of divestments around the globe to appease regulatory concern. Molson Coors is set to acquire SABMiller's stake in the MillerCoors brewing venture and is still awaiting approval from Chinese regulators.
Molson Shares
The revelation of the suspended integration sent Molson down as much as 8.9 percent in U.S. trading. Both AB InBev and SABMiller had closed in Europe when the memo become public. SABMiller's American depository receipts fell as much as 4.6 percent.
SABMiller said July 27 that its board would consult shareholders about AB InBev's new offer and make an announcement thereafter. Altria and Molson Coors declined to comment.
The deal to merge SABMiller and AB InBev, termed “Megabrew” by analysts, would create a behemoth controlling about half of the industry's profits. The combined company will have the No. 1 or No. 2 positions in almost all of the world's biggest beer markets, and provide AB InBev its first toehold in Africa, where about 65 million people are due to reach the legal drinking age by 2023.
The U.K.’s decision to leave the European Union, following a popular referendum last month, has sent shock waves through the European corporate landscape.
Companies ranging from Siemens AG to luxury-goods maker Burberry Plc have put future investments under review, and consumer-facing corporations including low-cost airline EasyJet Plc have said the vote has increased uncertainty as the U.K. embarks on the arduous process of uncoupling from decades of political and economic entanglement with the European bureaucracy.
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