Saturday - Sep 23, 2017

Takeover action heating up in the brewery world

Takeover action heating up in the brewery world

A battle of the giants is apparently getting well underway in the beer world with all of its key players, AB InBev, SABMiller and Heineken all involved.

The turmoil reportedly began when UK-based SABMiller, brewers of Peroni, Grolsch and Coors beers, were rumored to be the likely recipients of a takeover bid from Anheuser-Busch InBev (ABI) of Belgium, currently holding the title of the world’s largest brewery concern.

SABMiller, possibly in an attempt to fend off ABI’s advances, has reportedly made an offer to buy Heineken into a deal that would shake up the brewing world.

The chain reaction continued when the Amsterdam-based Heineken family, who holds a controlling interest in the brewery, wasted little time in rejecting SABMiller’s offer group’s which would combine the world’s second and third-largest brewers, and possibly make them the largest.

The latest round of possible takeovers, in the event that happens, would mark further consolidation in the beer industry, with the industry still in a state of shock almost five years after the $52 billion merger of another Belgian-based brewery, Anheuser-Busch and InBev which led to the creation ABI.

Whilst the size of SABMiller’s bid for Heineken still remains within the bounds of confidentiality, it could create a company larger that than which emerged in 2009 after the Anheuser-Busch and InBev merger, with SABMiller estimated to be worth around $45 million.

Early statements from the Heineken founding family indicated that they will unwilling to lose control of the group, and with them being the owners of a majority share in the holding company which controls half of the shares in the Dutch brewer, it appears that it will be difficult if not impossible to convince the Heinekens of any possible advantages in placing themselves under the SABMiller wing. SABMiller is reportedly particularly interested in Heineken’s beer brand, which it would distribute through the emerging markets that the have developed, particularly in Africa.

In fact , the Heinekens immediately responded a statement in which they stated that the Heineken family has informed SABMiller, Heineken and Heineken Holding of its intention to preserve the heritage and identity of Heineken as an independent company. “The Heineken family and Heineken’s management are confident that the company will continue to deliver growth and shareholder value.” Summed up the statement.

Whether the other shareholders in the brewery, whose range of beers include Sol, Tiger and Strongbow, would be inclined to agree with the Heineken family with the brewery having experienced steady decline in sales in the European market, which they had previously dominated, with much of their business possibly going towards SABMiller who have consistently continued to increase their market share.

If the possible SABMiller/ABS takeover and the Heineken/SABMiller affair wasn’t enough, SABMiller is also reported to be considering a form of amalgamation with Diageo, the multinational drinks group behind Guinness and Smirnoff, possibly to provide another smokescreen as the company does all in their power to ward off interest from ABI.

AB InBev accredited with holding a 20% share of the global beer market in 2013, with SABMiller lagging behind with 9.6%, and Heineken in third place with 9.3%.

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