Canadian Manufacturing

MolsonCoors to buy Miller for US$12B as AB InBev, SAB skirt regulators in beer mega-merger

Brewer sees opportunity in "game-changing" deal, while rival InBev to form company with one-third of global beer sales



DENVER—Budweiser maker Anheuser-Busch InBev has reached a final agreement to buy SABMiller in a US$107-billion deal that will combine the world’s two biggest brewers and create a company that makes almost a third of the beer consumed worldwide.

AB InBev and SABMiller own hundreds of brands, including Budweiser, Corona, Grolsch, Stella Artois and Labatt, a formerly independent Canadian company.

In a separate but related deal, rival MolsonCoors will get full control of the Miller business in the United States – a longtime rival of Anhauser-Busch – and worldwide rights to the Miller brands for $12 billion by the second quarter of 2016.

SABMiller agreed to sell its 58 per cent stake in the MillerCoors joint venture, which is 48 per cent owned by MolsonCoors, in an effort to ease regulatory concerns that AB InBev would have a stranglehold on the U.S. market after the merger.

The enlarged AB InBev – which does not have a name yet – will also need to address regulatory issues in China, which drinks a quarter of the world’s beer.

In Canada, the beer market has long been dominated by MolsonCoors and AB InBev, although the giants have increasingly been challenged by the popularity of smaller local craft brewers.

AB InBev and SABMiller had reached an agreement in principle on Oct. 13 and twice extended the deadline for a formal offer.

One of AB InBev’s prizes in creating a global beer company will be to gobble up SABMiller’s footprint in Africa. In a conference call with reporters, Brito made note of the potential for growth on the continent, where the middle class is growing.

SABMiller is the descendant of South African Breweries and has stretched its reach across the continent, betting that Africans will shift to higher quality beers as economic development increases disposable income. It had operations in 17 countries on the continent, with another 21 covered by Castel Group, in which it has a stake.

For its part, MolsonCoors is seeing the deal as a significant opportunity.

“This transaction is a game-changing opportunity for Molson Coors and advances our ambition to be the first choice for consumers and customers,” Molson Coors presdient and CEO, Mark Hunter said in a statement from Denver and Montreal, where the company has dual headquarters.

“In short, we will be a more competitive global company, better positioned to invest behind our core brands, expand our above premium portfolio, strengthen our commercial execution capabilities and deliver long term shareholder value.”

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