AB InBev, SABMiller to Ask Another Extension for Takeover Offer
November 03 2015 - 6:10PM
Dow Jones News
Anheuser-Busch InBev NV and SABMiller PLC plan to request on
Wednesday another extension for a formal takeover offer as the
companies seek more time to finish complex paperwork and continue
talks on the sale of SABMiller's U.S. business, according to people
familiar with the request.
It will be the second extension the companies have requested
since announcing an agreement in principle on Oct. 13. An
announcement is expected on Wednesday announcing the new deadline
for a formal proposal.
AB InBev and SABMiller declined to comment. AB InBev last week
said it had completed financing for the deal and conducted due
diligence.
The latest extension highlights the complexity of a deal that
would create a beer giant with a 28.4% share of the global beer
market, according to industry tracker Plato Logic. It also
illustrates AB InBev's interest in announcing a deal without having
a solution to regulatory concerns in the U.S., where it has a 45%
market share and SABMiller's joint venture MillerCoors LLC has a
25% share.
AB InBev is in talks to sell SABMiller's stake in MillerCoors to
its joint-venture partner Molson Coors Brewing Co., according to
people familiar with the matter. Molson Coors currently owns 42% of
MillerCoors. As part of the joint-venture agreement, Molson Coors
has a first right of refusal to buy MillerCoors, an option to top
another offer by 5% and the right to name the company's chief
executive.
The need to sell the SABMiller's business in the U.S. has taken
on added importance as legislators raise concerns about AB InBev
controlling 70% of the U.S. market. The top two lawmakers on the
Senate Judiciary Subcommittee said on Oct. 20 that they will hold a
hearing before the end of the year to evaluate how the merger will
affect competition and U.S. consumers.
An AB InBev spokeswoman last month said the company would
resolve regulatory issues like those in the U.S. "promptly and
proactively."
The push to sell SABMiller mirrors AB InBev's approach during
its last acquisition, a $20.1 billion takeover of the Mexican
brewer Grupo Modelo. To address U.S. antitrust concerns about the
deal, AB InBev on the same day announced a sale of the U.S. rights
to Corona, Modelo Especial and other beers to Constellation Brands
Inc.
In addition to the U.S., AB InBev's deal is expected to face
antitrust scrutiny in China, where SABMiller has a 23% market share
through its joint-venture with government-backed China Resources
Enterprise Ltd., the maker of Snow, the world's biggest beer by
volume. AB InBev has a 14% market share, with Budweiser and local
brands like Harbin.
Antitrust experts and industry analysts think Chinese
authorities would be reluctant to allow a foreign company to
control more than a third of the market. They also have raised
concerns about markets like Italy and the U.K. where the brewer may
have to sell off rights to brands to reduce the market share of the
combined brewers in those countries.
The company also has faced some resistance in South Africa where
unions last month called on the government to reject the deal,
saying it would affect tax revenue and job security.
Write to Tripp Mickle at Tripp.Mickle@wsj.com and Shayndi Raice
at shayndi.raice@wsj.com
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(END) Dow Jones Newswires
November 03, 2015 17:55 ET (22:55 GMT)
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