BY Richard Summerfield
The $106bn mega merger between beer rivals Anheuser-Busch InBev and SABMiller is approaching a key crossroads as regulatory concerns on both sides of the Atlantic are addressed.
In light of antitrust issues in Europe, it is believed that Anheuser-Busch InBev will sell the Peroni and Grolsch brands it will gain from its merger with SABMiller. Indeed, AB InBev will likely divest of several SABMiller brands as the majority of the company’s products are European-focused. The combined company’s dominance of the European market would undoubtedly be a red flag for European regulators.
The loss of two of SABMiller’s four global brands will have a significant impact on the company in terms of both volume and profitability. Yet reducing the lucrative European portfolio is a necessary evil if AB InBev is to win merger approval. Dutch group Heineken, US based Molson Coors and Irish firm C & C Group have all been mooted as potential acquirers of the Peroni and Grolsch brands, expected to sell for billions of dollars.
Away from Europe, the merger has already acted as the catalyst for a number of divestitures. To appease antitrust concerns in the North American market, SABMiller will sell its 50 percent voting interest and 58 percent economic interest in MillerCoors to Molson Coors, its partner in the joint venture, for around $12bn. The Miller brand is one of the most important, and highest selling beer franchises globally.
Next week the merger between the two firms will be subject to a US Senate hearing according to the Senate Judiciary Committee.
Outside of Europe and the US, regulatory concerns around the deal remain. Chinese regulators in particular are expected to create further difficulties down the road.