The Price of Growth for AB InBev
By Steve Holtz on Oct. 11, 2016LEUVEN, Belgium -- On the heels of it closing its $104 billion acquisition of SABMiller Ltd., Anheuser-Busch InBev SA/NV announced the divestiture of several brands as required by regulators around the world, including the sale of its 58% interest in MillerCoors, the joint venture that deals with marketing of SABMiller and Molson Coors products in the United States.
Here's a breakdown of what's been sold off to make the merger of the two largest beer brewers in the world possible ...
MillerCoors
AB InBev completed its divestiture of SABMiller’s interest in MillerCoors LLC, a joint venture in the United States and Puerto Rico between Molson Coors and SABMiller. The total transaction is valued at $12 billion. The deal was originally announced Nov. 11, 2015.
Under the terms of the Molson Coors purchase agreement, Denver-based Molson Coors has acquired SABMiller’s 50% voting interest and 58% economic interest in MillerCoors. MillerCoors has become a wholly owned subsidiary of Molson Coors, and Molson Coors has full control of the operations and resulting economic benefits of MillerCoors.
“[This is] a historic moment in the evolution of Molson Coors as we emerge as the world’s third-largest brewer by bringing together Molson Coors and MillerCoors into a bigger, better organization,” said Mark Hunter, president and chief executive officer of Molson Coors. “Having successfully operated the MillerCoors joint venture since 2008, we know the business well and have been working to ensure that today represents a seamless transition for our customers, partners, distributors and employees. It will really be business as usual, with an energized team that is playing to win and committed to setting the bar even higher for the future of our business.”
Under the terms of the Molson Coors Purchase Agreement, Molson Coors has acquired full ownership of the Miller beer brand portfolio outside of the United States and perpetual licenses to the U.S. rights to all of the brands currently in the MillerCoors portfolio for the U.S. market, including import brands such as Peroni and Pilsner Urquell.
The sale also includes the global Miller brand, sold in more than 50 countries, as well as related trademarks and other intellectual property rights.
Peroni, Grolsch and Meantime
In Europe, AB InBev completed its divestiture of SABMiller’s interest in the Peroni, Grolsch and Meantime beer brand families and associated businesses in Italy, the Netherlands, the United Kingdom and internationally (excluding certain rights in the United States).
The transaction values the business at $2.8 billion on a debt-free/cash-free basis. The deal was originally announced Feb. 10, 2016.
Snow Breweries
In China, AB InBev completed its divestiture of SABMiller’s equity interest in China Resources Snow Breweries Ltd. to China Resources Beer Holdings Co. Ltd. The total consideration of the transaction is $1.6 billion. The deal was originally announced March 2, 2016.
China Resources Beer Holdings (CRB) has acquired SABMiller’s 49% equity interest in the share capital of China Resources Beer Holdings (CR Snow), and CR Snow has upon completion become a wholly owned subsidiary of CRB.
Coca-Cola Co.
Meanwhile, in Africa, the Coca-Cola Co., Atlanta, informed AB InBev of its intention to acquire AB InBev’s stake in Coca-Cola Beverages Africa (CCBA). AB InBev said it will negotiate the terms of the transaction with Coca-Cola according to the contractual arrangements.
This news comes as some analysts have suggested AB InBev could make a bid to purchase Coca-Cola Co. as its next major acquisition. AB InBev has not commented on that prospect.
AB InBev said it anticipates the buyout of Coca-Cola Beverages Africa will not have a material financial effect on the beer brewer.