Government Clears AB InBev and SABMiller Beer Giant Merger
The U.S. Department of Justice has cleared the way for one of the largest corporate mergers in history, nine months after Anheuser-Busch InBev presented its $108 billion pitch to acquire beverage competitor SABMiller. IBISWorld estimates that the two multinational beverage companies currently represent a combined 27.7 percent of the Global Beer Manufacturing industry’s revenue, posing a dominant presence that had antitrust regulators concerned about the proposed merger’s threat to regular market competition.
While the proposed deal is global in scope and therefore must first pass antitrust regulatory scrutiny of many countries in which the two companies operate, the U.S. presented most significant obstacle to the deal’s completion. IBISWorld estimates that Anheuser-Busch InBev and MillerCoors, the latter of which is a joint venture between SABMiller and Canadian-American Molson Coors Brewing Company, currently represent the two largest brewers in the industry with respective market shares of 41.2 percent and 12.1 percent. The proposed merger, which would effectively consolidate Anheuser-Busch InBev and MillerCoors into a massive entity capable of generating over half of the industry’s total revenue, was not expected to win the approval of U.S. antitrust regulators without first offering significant concessions. It had been widely speculated that SABMiller would sell its entire 57 percent stake of MillerCoors to Molson Coors to alleviate the concerns of the Department of Justice. Regulators approved the deal on Wednesday on the condition that SABMiller sell its stake and that it also agrees to allow antitrust regulators to review any of the company’s future acquisitions of craft brewers and beer distributors.
The deal represents the culmination of a decade of massive mergers and acquisitions in the alcoholic beverages sector, as beer manufacturers struggle to generate sustained revenue growth from U.S. consumers whose consumption of premium international beer brands has wavered. IBISWorld estimates that per capita expenditure on alcohol will increase by a miniscule 0.3 percent in 2016, and the Breweries industry is projected to grow by a slim 0.9 percent annualized rate over the five years to 2021. International brewers’ struggles have also stemmed from rapid consumer movement toward craft and local beer styles; IBISWorld estimates the Craft Beer Production industry will grow by an annualized 4.4 percent over the five years to 2021.