AB InBev, SABMiller Merger Puts The Miller Time In Budweiser Beer? Takeover Faces Anti-Trust Challenge

AB InBev, SABMiller Merger Puts The Miller Time In Budweiser Beer? Takeover Faces Anti-Trust Challenge

A potential AB InBev, SABMiller merger has the potential to create the world’s largest beer brewer in the world. But will we ever see the Miller Time in Budweiser beer, or will government anti-trust regulators prevent such a large scale merger?

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The proposed AB InBev, SABMiller merger was announced on Wednesday. Based upon British takeover laws, SABMiller Plc, the owner of Miller Genuine Draft and Peroni, has until 5 P.M. on October 14, 2015, to accept a potential offer from Anheuser-Busch InBev or walk away.

“AB InBev’s intention is to work with SABMiller’s Board toward a recommended transaction,” the Anheuser-Busch InBev company said in a statement, according to the Associated Press. “There can be no certainty that this approach will result in an offer or agreement, or as to the terms of any such agreement.”

In its own statement, SABMiller said that AB InBev intended to make a proposal, but so far, the terms of the merger had not been discussed.

“The board of SABMiller will review and respond as appropriate to any proposal which might be made,” it said.

The creation of AB InBev-SABMiller would create a merged company worth about $275 billion. While AB InBev has dominated the Latin American market, the reason a takeover is attractive is due to SAB miller’s strong influence in Africa, a fast-growing market for beer consumers.

“The real attraction is Africa, where AB InBev has no presence, as well as some add-ons in Asia and Latin America,” said Societe Generale beverage analyst Andrew Holland.

According to Reuters, the one glaring issue with the proposed AB InBev, SABMiller merger is the combined group’s market share in the United States. Anheuser-Bush InBev controls about half the American market for beer, while SABMiller dominates just under 30 percent, so this means the takeover would give the newly merged company a 80 percent market share in the United States.

“Antitrust regulators in every country where the two companies are in the top three will question a merger,” said Erik Gordon, professor at the University of Michigan’s Ross School of Business. “The costs that could be saved in the distribution operations are high — and the antitrust hurdles are higher.”

What do you think about the proposed AB InBev, SABMiller merger? Do you want to see Budweiser and Miller combined?

[Image via Miller’s Ale House]