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SABMiller shares rise on AB InBev approach

Charles Huggins | 16 September 2015 | A A A
SABMiller shares rise on AB InBev approach

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Anheuser-Busch InBev (AB InBev) has approached SABMiller regarding a possible combination of the two companies. It seeks to work with SAB to gain the recommendation of the SAB Miller board. No terms have yet been agreed or disclosed. SABMiller shares rose by over 20% in response to the news.

Who is AB InBev?

AB InBev is the world's largest brewer with a portfolio of around 200 beer and malt beverage brands, including Budweiser, Corona, Stella Artois, Beck's, Leffe and Hoegaarden. The company operates in North America, Latin America, Europe and the Asia Pacific with market-leading positions in the U.S., Brazil and Mexico. It has been built up through a series of deals, orchestrated by Brazilian private equity group 3G partners, who jointly own around 40% of the share capital.

What are the implications of the proposed merger?

The merger would create a clear number one global alcoholic beverage giant, with dominant market positions in Latin America, Africa, the US and large swathes of Europe. Given the size of the two companies and overlapping exposures in multiple countries (including the US), AB InBev will have to agree to a series of divestitures to obtain regulatory approval. This is likely to result in a lengthy merger process.

We will keep clients informed when more details emerge.

This article is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment. This article has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication. Non-independent research is not subject to FCA rules prohibiting dealing ahead of research, however HL has put controls in place (including dealing restrictions, physical and information barriers) to manage potential conflicts of interest presented by such dealing. Please see our full non-independent research for more information.