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Talk Of ABI Play For SABMiller Heating Up Again

October 29, 2013

Now that Anheuser-Busch InBev (ABI) has secured the second half of Grupo Modelo that it long coveted, analyst chatter regarding a possible ABI move for chief global rival SABMiller is again on the rise. A Reuters survey of analysts shows that, with ABI’s debt-to-EBIDTA ratio expected to fall to below two by next year, many expect the brewing giant to again be on the acquisition trail, with SABMiller the most likely target.

If it came to fruition, such a deal, valued in the $100 billion area—twice what ABI paid for Anheuser-Busch in 2008—would create obvious antitrust issues in the U.S., where ABI has a 50% share and SABMiller’s MillerCoors joint venture with Molson Coors has another 30%. Analysts say one possible remedy would be an unwinding of MillerCoors, with Molson Coors buying out its current partner.

Rumors of a potential ABI/SABMiller merger have risen frequently in the past, but a combination of factors lead analysts to believe the time may finally be right, with some expecting a deal in the next year. Some believe SABMiller is primed to increase in value, while others cite the possibility that if ABI doesn’t move before the U.S. Federal Reserve tapers its bond-buying policy, interest on debt to finance the acquisition could significantly raise the effective price.

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