InBev’s Plan B?

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Brew Blog

Merger of equals with SABMiller?

The Financial Times Alphaville blog today reports that SABMiller plc would formally consider an offer from InBev valued at $29.64 a share, or $44.7 billion.

According to the report, SABMiller (the parent of Miller Brewing Company) would want to create a merger of equals, under the British “top-co” structure. SABMiller had no comment in the story.

From the report:

InBev, on the other hand, according to sources with a close knowledge of its thinking, favours a straightforward takeover, retaining its Belgium-based status and keeping the complex structure of shareholder agreements between its Brazilian managers and aristocratic Belgian founding families in place.

Any transaction with SABMiller is being considered as a distinct “Plan B” to a preferred takeover of Anheuser Busch in the US. In any case, SAB has told InBev that it is unable to engage in meaningful discussions until it completes its US beer joint venture with Molson Coors in the US.

The story also notes “the potential synergies, put at around $800m annually, are significantly below the $1.4bn being privately forecast in an Anheuser takeover.”

A Dow Jones story, meanwhile, said the report was met with some skepticism.

A report by Credit Suisse analyst Carlos Laboy on Tuesday weighed in on a hypothetical combination between InBev and SABMiller:

Such a deal would be a nightmare for A-B. The prospect of getting permanently boxed into an inferior and disadvantaged global footprint by Inbev and SABMiller should cause AB board to think really hard about the cost of saying “no” to InBev as A-B could compound a decade of bad strategic decisions with the worst one yet. InBev may well be the final chance for A-B to get out of the strategic bind it has created for itself….

SABMiller would, on merit have to control the operations as InBev lacks both the human resource management capability and the proper balance of cost and brand management culture that SABMiller seems to master. Right now, such a deal could not happen without the approval of Altria and of the Santo Domingo family on the SABMiller side.

Here is the Alphaville report on InBev’s “Project Barium.”

Dow Jones reported on skepticism regarding the report here.

The Credit Suisse report can be seen here.

 

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