Its the end of life as we know it #2-Bud/Miller parent companies to merge

[THE_DEVIL]

• 
  AB InBev, SABMiller Agree To $106 Billion Merger; Will Create World's Biggest Beer Company

• BRUSSELS (AP) — At the sixth time of asking, British-based brewer SABMiller accepted "in principle" Tuesday a 69 billion-pound ($106 billion) takeover offer from Belgian-Brazilian Anheuser Busch InBev that will create the world's biggest beer company and bring together top U.S. brands Budweiser and Miller Genuine Draft.
  
  Having dismissed the five previous proposals from AB InBev over the past few weeks as undervaluing the company, the directors of SABMiller finally succumbed to an offer that values each SABMiller share at 44 pounds.
  
  AB InBev, which owns Budweiser among a range of top-selling brands, has until Oct. 28 to come up with a formal offer. Over the coming two or so weeks, the two sides will work on the terms and conditions of the takeover offer as well as the financing of the deal.
  
  In statements, the two companies said the all-cash offer represents a premium of around 50 percent to SABMiller's share price on Sept. 14, the last trading day before renewed speculation of an approach from AB InBev emerged. AB InBev's first offer valued SABMiller, which has its roots in South Africa, at 38 pounds a share.
  
  The markets think that the deal is now very likely and SABMIller's share price was trading right near the offer price. In early-morning trading in London, SABMiller's shares were up 8.8 percent at 39.42 pounds.
  
  If the merger deal is formally agreed, then the combined company will control some 31 percent of beer sales around the globe. Given the size of the company, there are likely to be some regulatory concerns, notably in the U.S. and China as authorities worry about the impact on consumer choice.
  
  The new company would dwarf the next biggest player, Heineken, which has 9 percent of the market. A combined company would have total annual sales of $73.3 billion.

 

[Pepperman]

Where have you been? This has been out there for over a month already.

The combined entity will have to sell SAB's businesses in the United States for anti-trust reasons, but it's incredibly likely (if not a foregone conclusion) that Molson Coors is buying these assets. Also, the China business needs to be sold for anti-trust reasons, and that's a pretty big nut too. There are also some "change of control" provisions with Coca-Cola as SAB and Coke are very close in markets like Africa and the Middle East (delivery, bottling).

It is probably a good deal for both sides, which is why both sides came to the table over the last month to hammer it out.

 

[hawkeye54545]

The price of delicious, nectar of the gods Busch Light is about to go up.

 

[bdg8]

doesn't it sound like they will have to sell off many brands to gain approval here? But yes, the Brazilians will raise the price of beer, like they have been doing with Bud family products

 

[Pepperman]

doesn't it sound like they will have to sell off many brands to gain approval here? But yes, the Brazilians will raise the price of beer, like they have been doing with Bud family products

The Brazilian company, AmBev, has nothing to do with this transaction (as of now). Some speculate they may ultimately become involved should ABI decide to sell Colombia / Peru / Ecuador to them. But those markets are expensive given the growth potential and the high market share SAB has, so it would be difficult for AmBev to finance this.

Perhaps to the point I think you were making (although I don't see why "Brazilians" are mentioned) the price of beer only goes one way. And people like me will find a way to pay it.

 

[bdg8]

The Brazilian company, AmBev, has nothing to do with this transaction (as of now). Some speculate they may ultimately become involved should ABI decide to sell Colombia / Peru / Ecuador to them. But those markets are expensive given the growth potential and the high market share SAB has, so it would be difficult for AmBev to finance this.

Perhaps to the point I think you were making (although I don't see why "Brazilians" are mentioned) the price of beer only goes one way. And people like me will find a way to pay it.

3G Capital is behind it. The have a blueprint, they cut costs and raise prices. So yes, beer will always go up in price, 3G will quicken the process.

"G has interests that extend far beyond the beer industry. Lemann's firm also worked with Warren Buffett to orchestrate the Kraft-Heinz merger earlier this year.

His private-equity firm has since wasted little time in shaking up the upper ranks of the newly-combined company, and has a reputation for savage cost-cutting."

 

[CarolinaHawkeye]

3G Capital is behind it. The have a blueprint, they cut costs and raise prices. So yes, beer will always go up in price, 3G will quicken the process.

"G has interests that extend far beyond the beer industry. Lemann's firm also worked with Warren Buffett to orchestrate the Kraft-Heinz merger earlier this year.

His private-equity firm has since wasted little time in shaking up the upper ranks of the newly-combined company, and has a reputation for savage cost-cutting."

Cool. More corporate profits and more people on unemployment.

 

[Old_wrestling_fan]

Cool. More corporate profits and more people on unemployment.

Well...unless you don't buy their product(s) and instead choose to buy locally brewed beer, perhaps at a slightly higher price point.

 

[Pepperman]

3G Capital is behind it. The have a blueprint, they cut costs and raise prices. So yes, beer will always go up in price, 3G will quicken the process.

"G has interests that extend far beyond the beer industry. Lemann's firm also worked with Warren Buffett to orchestrate the Kraft-Heinz merger earlier this year.

His private-equity firm has since wasted little time in shaking up the upper ranks of the newly-combined company, and has a reputation for savage cost-cutting."

Oh, I see. Sorry, I should have gotten this the first time. BRC is the controlling shareholder of ABI, yes. I thought you meant "AmBev" which is the Brazilian-listed subsidiary of ABI (holds 63% of AmBev shares).

 

[Huey Grey]

Makes sense. Two of the crappiest beers in the world decide to get hitched. You usually marry to your level.

 

[Pepperman]

Well...unless you don't buy their product(s) and instead choose to buy locally brewed beer, perhaps at a slightly higher price point.

That is the risk the company faces. I know somebody who is part of ABI's acquisition team, and his specific task is to try to find craft brands that have enough potential to be consolidated into ABI's business and not lose their appeal as a "craft" beer. That's a very tough line to toe, however.

For example, look at how Heineken bought half of Lagunitas a while back... They claim to want to just have half of the economics and let Lagunitas run itself as it would have... yeah, right, and the end result is consumers will be less likely to view Lagunitas as a craft beer from now on.

This happens all of the time in retail banking. Through mergers and acquisitions, a bank gets beg enough that individual depositors say "screw this, I don't like paying fees for everything and not personally knowing my branch managers anymore!" A new bank pops up that is local and promises better service. Time passes, and the big bank acquires the little guy. Start the process over. This is how I suspect craft brewing is going to go as well.

 

[unIowa]

That is the risk the company faces. I know somebody who is part of ABI's acquisition team, and his specific task is to try to find craft brands that have enough potential to be consolidated into ABI's business and not lose their appeal as a "craft" beer. That's a very tough line to toe, however.

For example, look at how Heineken bought half of Lagunitas a while back... They claim to want to just have half of the economics and let Lagunitas run itself as it would have... yeah, right, and the end result is consumers will be less likely to view Lagunitas as a craft beer from now on.

This happens all of the time in retail banking. Through mergers and acquisitions, a bank gets beg enough that individual depositors say "screw this, I don't like paying fees for everything and not personally knowing my branch managers anymore!" A new bank pops up that is local and promises better service. Time passes, and the big bank acquires the little guy. Start the process over. This is how I suspect craft brewing is going to go as well.

Except, in banking, new community banks are not popping up anymore. The closure and consolidation rate since 2008 has been sweeping, I am hoping the de novo market pops back up but there are very few new charters even being applied for right now much less being accepted.

I'm with you guys though, well the snooty beer drinkers here, I try to buy craft/local beers whenever possible. The variety available is tremendous and I am now past my days of throwing down a 12 - 18 pack in one sitting.

 

[bdg8]

That is the risk the company faces. I know somebody who is part of ABI's acquisition team, and his specific task is to try to find craft brands that have enough potential to be consolidated into ABI's business and not lose their appeal as a "craft" beer. That's a very tough line to toe, however.

For example, look at how Heineken bought half of Lagunitas a while back... They claim to want to just have half of the economics and let Lagunitas run itself as it would have... yeah, right, and the end result is consumers will be less likely to view Lagunitas as a craft beer from now on.

This happens all of the time in retail banking. Through mergers and acquisitions, a bank gets beg enough that individual depositors say "screw this, I don't like paying fees for everything and not personally knowing my branch managers anymore!" A new bank pops up that is local and promises better service. Time passes, and the big bank acquires the little guy. Start the process over. This is how I suspect craft brewing is going to go as well.

Yeah it seems like the big brewers know they need to get in on the craft beer craze, so they don't really want people to know when they acquire a brewery, as that would ruin people's perceptions. Kind of like when Unilever bough Ben and Jerry's.