For a while now, Anheuser-Busch (AB) InBev, the world’s largest brewer has tried to woo its biggest rival South Africa’s SABMiller, into a merger. But the latter would not be bought, rejecting an initial proposal said to be worth £38 per share, then another worth £40 (R820), which some people considered too low.
Yesterday, the Belgium based brewer increased its bid for SABMiller to £42.15 (R863.83) per share in cash, equivalent to company value of £68bn (R1.4trn). Which the British – South African company rejected yet again, saying that the valuation was insufficient. “It still very substantially undervalues SABMiller, its unique and unmatched footprint, and its standalone prospects,” the company said in a statement.
However, continual resistance could result in a major takeover war, which AB InBev is not shying away from. The CEO of the Belgium based company, Carlos Brito has said he was committed to a friendly deal, but did not rule out going hostile. “Now it’s up to the shareholders to have a look at it. If they think this is a good offer, they should act and encourage the board to engage.”
AB InBev is no stranger to acquisitions, the brewing giant is itself a merger of four companies that unites major Belgian, American, and Latin American brewers. The company believed the last offer is attractive enough to make SABMiller ‘say yes’, and expressed disappointment over the rejection.
The successful merge of these two companies would create a force in the global brewing industry as Africa would be added to AB InBev’s already dominant presence across Belgium, America, and Latin America. “We believe Africa in particular will be a key driver for the joint company in the future,” Brito said. Last month, the managing director of SABMiller Africa, Mark Bowman, revealed that Africa holds a multitude of business opportunities, and that the company was fiercely optimistic about its ability to expand in Africa. The company which has primary brewing operations in 17 countries across Africa, has seen transformational beer growth in key markets across the continent.
SABMiller itself is a merger that unites Africa and America – SAB (South Africa) and Miller Brewing Company (USA). The company went from being a local conglomerate to the second-largest brewer in the world in 2011 after it acquired several other companies in South Africa, Latin America, and Australia. Today, SABMiller produces over 200 beers, and has 70,000 employees across 80 countries. The company also has a growing soft drinks business, and is one of the world’s largest bottlers of Coca-Cola drinks.
AB InBev has until 6pm on October 14 to keep up with the chase or raise the white flag. While SABMiller may ask takeover regulators for an extension to the deadline. For many this would be the end-game of consolidation in the brewing industry with the four brewing giants – AB InBev, SABMiller, Heineken and Carlsberg – present across the globe and brewing over 50 percent of the world’s beer.
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