A-B InBev Eyeing SABMiller?

Reports speculate on takeover possibilities, effect on U.S. beer market

SABMiller, A-B InBev

ST. LOUIS -- SABMiller, the world's second-largest brewer by volume, may be a takeover target for its rival and world's No. 1 brewer Anheuser-Busch InBev, Credit Suisse analysts said, according to a report by STLtoday.com. And Bloomberg News reported that A-B InBev could buy SABMiller after it has cut debt incurred from buying St. Louis-based Anheuser-Busch in 2008, the analysts wrote in a note.

Belgium-headquartered A-B InBev is doing well on the debt front, said STLtoday, paying it off ahead of schedule.

SABMiller could be valued at $71 billion; the acquisition of A-B three years ago was valued at $56 billion. said the report.

The analysts, including Anthony Bucalo, noted that buying SABMiller would give A-B InBev greater exposure to emerging markets such as Latin American and Africa and would counter "the continuing ills of the U.S. domestic beer market."

"We appreciate ABI for its strong management and structural strength in the world's top profit pools and SABMiller for its solid organic growth and advantaged competitive positions in key emerging markets," Credit Suisse said. "Over time, we believe both these companies' strategic interests will continue to align and this would be of benefit to both sets of shareholders."

London-headquartered SABMiller gets 69% of its revenue from regions outside North America and Europe, Bloomberg said. AB InBev gets 54% of its revenue from developed markets including the United States and western Europe.

One potential sticking point, according to the report: The United States.

The combination of the makers of Budweiser and Miller (plus Coors, through the MillerCoors joint venture) would create a single brewery controlling nearly 80% of the U.S. market. Regulators likely would require any merger between A-B InBev and SABMiller to divest of some U.S. beer brands, the report said.