Budweiser Creator and Largest Brewing Company AB InBev Eyes Takeover of Second-Largest Beer Maker SABMiller
Anheuser-Busch InBev (AB InBev), Multinational brewing company and maker of Budweiser, announced Wednesday its intention to acquire long-time rival SABMiller Plc. in what could be the biggest merger in the industry's history.
The Wall Street Journal reports Wednesday that SABMiller - a British/South African multinational brewing company - has been informed by AB InBev of its takeover plan.
Although no definite deal has been made and the terms of the agreement not yet disclosed "it is likely that any bid would be well in excess of SABMiller's Tuesday market capitalization of $75 billion," The Wall Street Journal writes.
Bloomberg Business forecasts on the same day that if the acquisition of SABMiller pushes through, it "would be the biggest in the industry's history and cap more than a decade of consolidation across brewing companies."
A source from SABMiller says no offer has been made as of the moment.
"At this stage, we're in wait and see mode," the source states.
The world's two largest brewers would have around $275 billion market value considering its current prices.
"The real attraction is Africa, where AB InBev has no presence, as well as some add-ons in Asia and Latin America," says Societe Generale analyst Andrew Holland.
Before the announced buyout on Wednesday, SABMiller's stock recorded a 19 percent decline within a year.
"Given that SAB's share price has been so weak in the last 12 months, it makes a deal much more affordable," says Sanford C. Bernstein analyst Trevor Stirling.
"It's exactly the moment they've been waiting for," adds Morningstar analyst Phil Gorham. "It makes sense financially for the first time in years."
According to analysts, the acquisition of SABMiller will cost AB InBev around $130 billion plus the amount comprising SABMiller's debt, making it the biggest mergers and acquisitions deal this year.
AB InBev will have until Oct. 14 to decide on the takeover, as per UK takeover rules.
