A-B InBev, SABMiller Merger Talk Heats Up

Deal could mean selling off MillerCoors branch

A-B Inbev SABMiller

CHICAGO & ST. LOUIS -- Talk of a merger between Anheuser-Busch InBev and SABMiller has picked up again this summer with many industry insiders forecasting a deal between the beer giants will be completed this year or in 2015, according to a Seeking Alpha report.

The report comes just as talks were confirmed in another high-profile, long-rumored merger--between tobacco companies Reynolds American Inc. and Lorillard Inc.

The rumored beer combination, which analysts have been predicting for years, would create a beer juggernaut that would account for close to 30% of global beer volume. The allure for A-B InBev is SABMiller's presence in Africa and China. However, SABMiller's stake in U.S. branch MillerCoors, a joint venture between SABMiller and Molson Coors Brewing Co. since October 2007, would very likely need to be sold off to make the deal fly with regulators, according to the report.

"Some analysts note the growth channels are vibrant enough to justify the deal premium," the report stated. "Massive synergies on the cost side also help make the math work out."

One element that could sour the deal, according to Seeking Alpha contributor Tim McAleenan, is "the massive amount of debt that A-B would have to take on to buy SABMiller." That issue "puts a deal out of reach."

Rumors of A-B InBev wanting to purchase SABMiller go back as far as 2011. At that time, it was suggested SABMiller could be valued at $71 billion. InBev's acquisition of Anheuser-Busch in 2008 was valued at $56 billion.