31st October, 2013 by Rupert Millar
US business journals are rife with speculation that AB InBev and SAB Miller may resume merger talks worth US$100 billion.
Following a Reuters report, the Financial Post said that with Carlsberg protected by a trust and Heineken being family owned, it was not unreasonable to think of the world’s two biggest brewers joining forces as undeveloped markets dwindle.
It continued that merger talks of this kind were “not new”, with talks having previously taken place until they were suspended in June 2012 when AB InBev took over Grupo Modelo.
Furthermore, it said that some industry experts were expecting a deal, within a year”.
One insider source with experience of large drinks industry mergers said it was, “more a question of when, not if”.
InBev paid US$52bn for Anheuser-Busch in 2008 and some think it is seeking to get larger.
Asia is a hive of independent breweries but many are state owned and Heineken’s protracted deal over Asia Pacific Breweries last year, when it paid nearly 35 times more than it originally intended thanks to competition from ThaiBev, may make brewers consider other options for now.
Although many say it would be a comparatively simple deal, there would be problems with competition laws.
AB InBev was forced to sell some assets to Constellation in the wake of the Modelo deal to appease the US and with InBev and SAB Miller controlling three quarters of the US market between them, it is likely that one or the other would have to shed an asset to push any deal through.
A sale of SAB’s stake in its Miller brand to partner Molson Coors would be among the most obvious choices.
In China too, SAB’s venture with market leader Snow may come under pressure, as would InBev’s various partnerships.
Both brewers have made no comment so far.