Sector News

AB InBev-SABMiller deal faces setback in South Africa

April 5, 2016
Food & Drink

Anheuser-Busch InBev’s planned $106 billion acquisition of London-based SABMiller hit a roadblock in South Africa, where regulators there need more time to sign off on the “Mega Beer” merger.

Bloomberg has reported the South Africa’s Competition Commission will miss a deadline this week to complete its probe of the proposed merger, thus resulting in a probe that will take more time before AB InBev BUD -1.59% gets local approval for a deal that will combine the world’s two largest brewers.

For the deal to go through, AB InBev is aiming to win over regulators in several markets, most notably the U.S. and China where divestitures are needed to win government approval for a merger that will result in a massive producer generating about one out of every three beers made globally.

But for South Africa the deal is also important. SABMiller’s South African Breweries was founded in 1895 and is the nation’s largest brewer and leading distributor of beer and soda. It operates seven breweries across the nation as well as hop production company and other beer-related farming assets.

To win approval in the U.S. and China – the two markets analysts most fretted about – AB InBev has announced separate deals to potentially sail past antitrust worries. In November, AB InBev agreed to sell the 50% stake that SABMiller owns in MillerCoors to Molson Coors tap-a in a $12 billion transaction, while in March, it agreed to sell SABMiller’s stake in a Chinese brewer for $1.6 billion. Both of those deals are contingent to the successful closing of the bigger SABMiller deal.

By John Kell

Source: Fortune

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