SABMiller acquisition will cost AB InBev another 8 billion euro

Miller Coors sold immediately

“This is it. We will become the first actual worldwide brewery.” Those were the words AB InBev CEO Carlos Brito uttered to announce the deal with SABMiller is done. With a formal bid of 44 pounds per share, the Brazilian CEO has struck his biggest deal ever. It is not only the largest deal a (originally) Belgian company has ever struck, it is also the largest overseas deal ever and is in the top 6 of biggest acquisitions worldwide.

SABMiller immediately sold its stake in American Miller Coors to Canadian Molson Coors. That company already had 50 % of shares and will now pay 12 billion dollars (some 11.2 billion euro) to acquire the remaining shares.

Weak euro, strong dollar

The Miller Coors sale is an attempt by Brito and his associates to avoid a possible “no” from the American Antitrust Institute regarding the deal. On top of that, the sale will bring in much-needed cash as the weaker euro represented an 8 billion euro surcharge for AB InBev. When the deal was announced on 13 October, a pound was worth 1.349 euro, while the exchange rate at the conclusion of the deal reached 1.412 euro for every pound.

The deal should be concluded, judicially, in the second half of 2016, providing it does not run into any issues. Once concluded, the merger company can focus on integrating its operational and commercial divisions. The company has, for the time being, been called “Newco” (for “New Combined Company”) as both companies feel the new name is “not a priority” and that there has been a “lack of time” to decide one. The company will remain a Belgian entity and will be listed on the Brussels stock exchange.