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Megabrew: All foam, less beer

It is screamingly apparent that AB InBev’s attraction for SABMiller lay in its emerging market operations in Latin America and Africa, asserts the Financial Mail.

LAST October the world’s largest beer group, AB InBev, announced it was going to make a bid for the world’s second-largest beer group, SABMiller. Seven months and several conditional deals later, it looks as though AB InBev will in fact be bedding down a beer group that might not even make it onto the list of the top six largest.

It’s also extremely unlikely that the merged entity, referred to as Megabrew, will account for 30% of the global beer market, as has been touted by analysts. That figure is based on a combination of the two groups as they were in October — it doesn’t allow for disposals.

Those disposals will undo most of 30 years of hard work by SABMiller management, who spread out from the African continent in the mid-1990s in search of opportunities to build a powerful global player.

Their search took them first to China and Eastern Europe, then to North America and, most recently, to Latin America. The combination of an aggressive acquisition strategy and strong organic growth pushed SABMiller to the number two slot in the late 2000s.

If all goes to plan — AB InBev’s plan — most of that work will be undone within months of completion of the AB InBev/ SABMiller merger.

In the b est-case scenario, AB InBev, headed by CE Carlos Brito, will pick up about US$21.5bn to set off against its $108b n mega-deal.

The string of proposed transactions— all conditional on the SABMiller acquisition being approved by various regulatory authorities across the globe and the two sets of shareholders — kicked off with the disposal of SABMiller’s stake in the MillerCoors joint venture to Molson Coors for $12bn.

This proposed transaction was announced within days of the formal release of the terms of the $108bn SABMiller acquisition.

Not long after that AB InBev announced the sale of a few of SABMiller’s top European brands. Japan’s Asahi Group will buy Peroni, Grolsch, and Meantime for €2.55bn…..

Financial Mail: Read the full article

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