(St. Louis, MO) – Lots of talk today about the unthinkable…
It’s just talk but news outlets are buzzing about the notion of an AB-InBev / SABMiller merger after analysts at Credit Suisse tossed out the idea.
From nieuwsblad.be (who I believe broke the story?):
“Credit Suisse is counting on an acquisition price of $ 71,000,000,000. Cost savings for both companies were 2.1 billion U.S. dollars [...]”
From St. Louis Post-Dispatch:
The analysts, including Anthony Bucalo (a respected stock analyst and one-time InBev employee), noted that buying SABMiller would give A-B InBev greater exposure to emerging markets such as Latin American and Africa and would counter “the continuing ills of the U.S. domestic beer market.”
“We appreciate ABI for its strong management and structural strength in the world’s top profit pools and SABMiller for its solid organic growth and advantaged competitive positions in key emerging markets,” Credit Suisse said. “Over time, we believe both these companies’ strategic interests will continue to align and this would be of benefit to both sets of shareholders.”
Why are they good bed-fellows, other than the fact that they’re both huge? Well, ABI has a big lead in the US, and has blocked SABMiller out of the second largest profit pool (Brazil) and the third (Mexico), so they can combine to create a behemoth without fear of antitrust concerns, says Carlos Laboy and fellow analysts of Credit Suisse. Also, ABI has control of their brands in China, while SABMiller does not control its China which “could become a problem over the long-term when China moves the earnings needle.”
The two companies control 80% of the U.S. market according to data from the Brewers Association so there would need to be some restructuring here in the U.S. in order for a merger to be approved.