EU Clears AB InBev's Takeover of SABMiller -- WSJ
May 25 2016 - 3:04AM
Dow Jones News
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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