BUD Anheuser Busch Inbev SA NV

By Natalia Drozdiak and Tripp Mickle 

BRUSSELS -- The European Union on Tuesday approved Anheuser Busch InBev NV's roughly $108 billion takeover of rival SABMiller PLC on the condition that the brewer shed almost all of SABMiller's European assets.

The European Commission, the bloc's antitrust agency, said it initially had concerns the deal would have led to higher prices and would have made tacit coordination among rival brewers more likely, but added that AB InBev's concessions assuaged those worries.

The European agency is the first major regulator to approve the combination of the world's two largest brewers. The deal is contingent upon also receiving approval in the U.S., China and South Africa. The regulatory review process continues in those markets.

The Belgium-based AB brewer has pledged to sell its European premium brands Peroni and Grolsch, as well as British craft-beer brand Meantime, to Asahi Group Holdings Ltd. in an offer valued at around $2.9 billion. It also said it would shed SABMiller's Central and Eastern European assets, but hasn't yet found a buyer for those.

The commission's decision to clear the deal is conditional upon AB InBev disposing of the assets, the EU said.

"Today's decision will ensure that competition isn't weakened in these markets and that EU consumers are not worse off," said EU antitrust chief Margrethe Vestager.

The AB InBev-SABMiller merger, which executives hope to close by the second half of this year, would create the world's biggest beer group with about 30% of the global market.

The deal, announced in November, has also drawn scrutiny from antitrust regulators in the U.S., China and other markets, including South Africa.

To appease regulators around the world, AB InBev has agreed to dispose of many of SABMiller's assets. In the U.S., it has agreed to sell SABMiller's interest in MillerCoors LLC to joint-venture partner Molson Coors Brewing Co. In China, it has agreed to sell SABMiller's interest in the joint venture known as CR Snow to China Resources Beer Holdings Co.

The brewer faced a different challenge in South Africa, where regulators evaluate how mergers affect employment. To overcome those concerns, AB InBev last month agreed to create a $69 million investment fund to support farmers, local manufacturing and jobs in the country. South Africa's Competition Commission continues to review the deal.

During an earnings call with analysts last week, SABMiller said the companies don't expect to close the deal before Aug. 12. SABMiller declined to comment on the review process in South Africa or China and didn't address the process in the U.S.

The EU said that without AB InBev's offered remedies in Europe, the fewer number of beer companies would have found it easier tacitly to coordinate prices in European national markets

The commission said its preliminary investigation "revealed documents and country-specific evidence in several member states indicating that European brewers seek where possible to engage in coordinated "follow the leader" type pricing at the national level." The market leader sets prices with expectation that rivals will follow, the EU said.

AB InBev's planned disposals of SABMiller assets in the central and eastern European region are important because the deal would have established an important link between Molson Coors and the merged company, the commission said. Molson Coors is AB InBev's licensed bottler and distributor in the Czech Republic, Hungary, Romania and Slovakia, and therefore would have had fewer incentives to compete, it added.

Write to Natalia Drozdiak at natalia.drozdiak@wsj.com and Tripp Mickle at Tripp.Mickle@wsj.com

(END) Dow Jones Newswires

May 25, 2016 02:49 ET (06:49 GMT)

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