Anheuser-Busch InBev Seeks Mega-Merger With SABMiller

By Michelle Jones

Ten months almost to the day after the initial rumor surfaced, Anheuser-Busch InBev (BUD) has officially announced that it is seeking a merger with SABMiller (SBMRF). The beer maker made an official statement today on the matter confirming that it has approached the company:

“Anheuser-Busch InBev notes the announcement made by SABMiller plc. AB InBev confirms that it has made an approach to SABMiller’s Board of Directors regarding a combination of the two companies. AB InBev’s intention is to work with SABMiller’s Board toward a recommended transaction. There can be no certainty that this approach will result in an offer or agreement, or as to the terms of any such agreement. A further statement will be made as appropriate.”

Anheuser-Busch, SABMiller stock surge

Shares of Anheuser-Busch climbed as much as 5.53% to $115.10 per share in early trading after the announcement was released. SABMiller shares skyrocketed during regular trading hours in London today, climbing as much as 20.65% to 3,637.00 pence sterling per share.

Analysts from most firms say a deal between the two companies would make sense and result in significant synergies. Sterne Agee CRT analyst April Scee noted this morning that Anheuser has a habit of growing itself by making acquisitions. If the company is able to gobble up SABMiller, it would be a sizeable one at more than 2 times leverage.

Beer market growth lagging

She added that Wall Street might be surprised at the timing of the announcement but probably not the outcome. Growth in the beer market has been weak recently, so the market likely sees an acquisition as being necessary for Anheuser-Busch. Scee sees a combination of Anheuser and SABMiller as a positive mood, especially because of the former’s “credentials” in mergers and acquisitions and also its ability to outperform in quantity and timing of synergies.

The Sterne Agee CRT analyst especially sees SABMiller as a strong acquisition target because of its strong exposure to Africa, which is one of the last remaining growth markets for beer.