A-B InBev Primed to Take Over SABMiller?

Industry players call an acquisition deal feasible and obvious

AB InBev, SABMiller

BRUSSELS -- Slowing growth at Anheuser-Busch InBev NV and a dearth of big takeover targets may finally drive the world’s biggest brewer to swallow its $79-billion rival, SABMiller Plc, according to a Bloomberg report.

After A-B InBev boosted revenue more than fivefold in the last 10 years with the help of $91 billion of acquisitions, growth for the maker of Budweiser and Stella Artois is forecast to slow over the next decade, according to analysts’ estimates compiled by Bloomberg. Tapping into SABMiller’s presence in faster-expanding regions such as Africa would allow A-B InBev to get that growth flowing again, shareholders Alpine Woods Capital Investors LLC and Henderson Global Investors said.

SABMiller chief executive officer Alan Clark told Bloomberg News in January that the case could be made for a tie-up, even though it would likely require divesting some U.S. operations to appease regulators. Sanford C. Bernstein & Co., which dubbed an AB InBev-SABMiller combination “MegaBrew,” estimates it would have almost half the global beer profit pool. The deal would increase earnings at A-B InBev immediately if it paid a 30 percent premium for SABMiller in cash, data compiled by Bloomberg show. Cost cuts could drive profit even higher.

“It’s such an obvious next--and indeed last--big move by the very acquisitive A-B InBev,” Matthew Beesley, head of global equities at London-based Henderson Global Investors, told Bloomberg. Henderson Global oversees $125 billion, including shares of A-B InBev. “There’s also clearly some strategic rationale to the deal, neatly filling all the geographic holes A-B InBev talks of wanting to fill.”

Click here to read the complete Bloomberg report.