The world’s biggest brewer, Belgian-Brazilian giant AB InBev, is mulling a takeover of its largest rival SABMiller in a potential $245-billion marriage combining top beer brands Budweiser and Grolsch, the firms revealed on Wednesday.
The sector is looking at consolidation faced with the increased popularity of so-called craft beers that are brewed by smaller independent firms.
AB InBev reported a sharp fall in second quarter profits owing to weak economic conditions in several markets, while Dutch beer giant Heineken recently bought half of US-based beer maker Lagunitas, hoping to cash in on the global rocketing popularity of craft beers.
“The board of SABMiller notes the recent press speculation and confirms that Anheuser-Busch InBev has informed SABMiller that it intends to make a proposal to acquire SABMiller,” said the British group.
AB InBev confirmed an approach had been made about a possible bid, but said there was “no certainty” of a deal.
SABMiller shares rocketed by more than a fifth in value, while AB InBev jumped by around 8%.
SABMiller, the maker of Foster’s, Miller and Grolsch beers, said its board “will review and respond as appropriate to any proposal which might be made”.
AB InBev, which brews beers Budweiser, Corona and Stella Artois, was formed in 2008 by the merger of Belgian-Brazilian group InBev and US brewing giant Anheuser-Busch.
AB InBev said it “confirms that it has made an approach to SABMiller’s board of directors regarding a combination of the two companies”.
At the close of trading on Tuesday, the two companies had a combined market value of €218.5-billion (about R3.3-trillion)
That value soared on Wednesday, with SABMiller’s share price up 20% to 3 626 pence in London midday deals.
Spiros Malandrakis, senior alcoholic drinks analyst at data research group Euromonitor International, said that “beyond the financial and cost savings side of such a potential deal”, the industry was being forced to act because of increased competition from different tasting craft beers brewed around the world.
“As the craft movement is coming of age and solidifies its position as a key disruption force within beer and the entire alcohol industry, corporate consolidation can perhaps provide some last drops of stock market intoxication,” he added.
SABMiller bought London-based craft beer company Meantime earlier this year for an undisclosed sum, as big players in a saturated beer market eye opportunities in the fast-growing segment. – AFP