Business Strategies / Capital Spending / Industry News

Justice Dept. Clears Anheuser-Busch InBev's Takeover of SAB Miller

By Lauren R. Hartman, Product Development Editor

Jul 21, 2016

The U.S. Justice Department has okayed the takeover bid by Anheuser-Busch InBev for rival SAB Miller p.l.c., reports The Wall Street Journal. The roughly $108-billion merger, announced July 20 (Wednesday), is one of the largest corporate mergers to date, unblocking one of the last major obstacles standing in A-B InBev's way to create the world's largest beer company. A-B InBev will control about 30 percent of the worldwide market.

While antitrust enforcers have lately blocked several other major U.S. acquisitions, they took limited action against A-B InBev, though they are restricting the beer giant’s ability to pursue the fastest-growing part of the U.S. beer market. They got AB InBev to accept an antitrust review of any future craft beer and distributor acquisitions. Usually, says the Journal, many of those transactions wouldn’t be big enough to qualify for such scrutiny.

The Justice Department's agreement with AB InBev also limits the Belgian-based brewer from creating incentive programs to lure independent distributors into selling and promoting its beers over rivals. It means A-B InBev will have to drop a new plan that would financially reward U.S. distributors for focusing on brands like Budweiser and Stella Artois.

Now, A-B InBev faces China as its only regulatory hurdle, and market analysts expect to approve the deal, which requires shareholder approval, in the coming months. The move could prove more difficult than initially expected, now that the United Kingdom’s vote to leave the European Union has sent the pound plunging. But A-B InBev is exploring related markets for sales growth. These include the hard soda category under its Best Damn Brewing line, low- and non-alcoholic beer, a Starbucks partnership to manufacture and distribute its ready to drink Teavana brand in the U.S., and certain Mexican beers that would compete in the U.S. with Constellation Brands.