When Anheuser-Busch InBev decides to do a deal, it gets done. And that's what is about to happen. It's been close to a month since ABI and SABMiller agreed to the deal in principle, this morning the two parties finally reached an "agreement on the terms of a recommended acquisition."
Now it's nearly a reality (dependent on certain criterium, antitrust blah blah). And for the first time, ABI is offering not a full cash deal, but the option to take restricted stock as well. Altria and certainly BevCo, the largest shareholders of SABMiller, will take stock due to tax reasons and also to be a part of a big Kahuna brewer, which will control about 30% of global beer sales even with divestitures. Heineken, the next largest global brewer, will only command about 9 or 10% of volumes. ABI's (NewCo they call it now) will command even more in gross margin.
A-B InBev ran through a litany of reasons as to why they chose to pursue the deal, but "in short," ABI "believes that more can be achieved together than apart." And here's why: ABI believes it can achieve pre-tax cost synergies of at least US $1.4 billion per annum (compared to SABMiller's $221 million in previously achieved savings). "The AB InBev Directors expect these synergies to be phased in over four years following Completion and to reach a recurring run rate of at least US$1.4 billion per annum by the end of the fourth year following Completion," says ABI in a release.
SABMILLER SAYS: Jan du Plessis, Chairman of SABMiller said: "SABMiller has an unmatched footprint in fast-growing developing markets, underpinned by our portfolio of iconic national and global brands. However, AB InBev's offer represents an attractive premium and cash return for our shareholders, and secures earlier delivery of our long-term value potential."
They've come a long way from selling beer to miners in Jo'burg. Graham Mackay is either turning in his grave, or smiling that he created a huge global brewery from a much smaller regional South African backwater brewery.
MOLSON COORS TAKES OVER MILLERCOORS. As we expected, ABI simultaneously announced the complete divestiture of SABMiller's stake in the MillerCoors joint venture to Molson Coors. The "total transaction is valued at $12 billion," (20% more than what the financial press and analysts had previously speculated. That's a big nut for Molson Coors to swallow).
In addition to full control of MillerCoors operations, Molson Coors will also "acquire full ownership of the Miller brand portfolio outside of the U.S. and retain the 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."
That's good news for Molson Coors, as it recently lost its ability to sell the Miller family of brands in Canada, costing the company "more than $60 million in sales," per WSJ.
Analysts believe Molson Coors can cut nearly a half a billion dollars in costs from the JV by "by eliminating brewers along the U.S.-Canadian border, reducing staff and improving procurement," per report.
WHAT IT MEANS TO THE U.S.? Well, Molson Coors will be the sole owner of MillerCoors. They can possibly finally operate as one unified company without two bosses. Secondly, both companies will be laden with new debt. So the pressure is on.
More later today as it comes in …….
ABI TO TESTIFY ON EUROPEAN TAX DEAL. Anheuser-Busch InBev is one of the eleven companies taking the stand next week at an EU tax hearing. The companies will be "quizzed by EU lawmakers on their European tax deals as part of a campaign to ensure multinationals pay their fair share of taxes," per Reuters. The only ruling that can come from the Parliament's tax committee is a "non-binding recommendation at the end of November," but the exposure from the hearing "will likely ramp up the pressure on companies seeking to minimize tax, and governments," per report. Also in attendance at the hearing will be HBSC, Google, Barclays, Coca-Cola Co., Facebook, Ikea, McDonald's, Philip Morris International, Walt Disney Co. and Amazon, who has already attracted the Commission's attention over its Luxembourg tax deal.
BEER STABILIZES AFTER STRONG GROWTH. Wells Fargo put out a note on trends yesterday on Nielsen all-channel data the four weeks to 10/31. Beer dollar sales were up 3.5% vs. 4.3% for 12 weeks, with pricing growth of 3%. A-B and MillerCoors are struggling a bit vs. longer trends, with price increases: "AB InBev $ sales were down -0.1% (+0.6% for 12-wks) as a result of avg. eq. price increase of +1.5% and -1.7% eq. unit volume declines," per note. "MillerCoors $ sales were down -1.1% (-0.4% for 12-wks) with average pricing growth of +1.1% and -2.2% eq. volume declines." Of course, Constellation beer is still seeing growth, up almost 21% in sales (about same for 12 weeks). Boston Beer was up 6.1%, and Heineken was up 2.3%.
THERE'S AN APP FOR THAT!
ANNOUNCING NEW APP FOR BEER BUSINESS DAILY. We are excited to announce our new, complimentary SchuPub app that is available to all iPhone, iPad and Android users. Once you do a search for SchuPub in your smart phone's App Store, you can download the app for free. Then you will be able to log-in and read the latest issue of Beer Business Daily each day. The app icon is blue with a beer mug, wine glass and our publisher Harry Schuhmacher's black eyeglasses on it.
Click here for a list of instructions with screenshots to help you get set up and troubleshoot any potential issues.
Attention site license members: you will use the same shared email address and password that you use on BeerNet.com to also access the app. Email Jessica Lopez at firstname.lastname@example.org to get that log-in information.
JOIN US FOR THE BEER SUMMIT. If you haven't looked at the schedule, it's here: https://docs.google.com/document/d/1uPFuMLSO8c8TA-fHUkd51X63pEk1JUngecYs8lbbCOo/edit
If you'd like to join us in New Orleans January 25-26, please sign up here: http://beernet.com/beer_summit.php Or you can call our office at 210-805-8006.
Until tomorrow, Harry
"Everybody hates me because I'm so universally liked."
- Peter de Vries
---------- Sell Day Calendar ----------
Today's Sell Day: 7
Sell days this month: 21
Sell days this month last year: 19
This month ends on a: Mon.
This month last year ended on a: Fri.
YTD sell days Over/Under: +2
(c) 2015 BeerNet Communications, Inc. - All rights reserved. Please, no forwarding or copying. Individual subscriptions $600/year. Corporate rates available.
Editor & Publisher: Harry Schuhmacher - email@example.com
Senior Beer Editor: Jenn Litz-Kirk - firstname.lastname@example.org
Associate Beer Editor: Jordan Driggers - email@example.com
Customer Service: Kim Nelson - firstname.lastname@example.org
Check beernet.com for back issues or to subscribe or renew. Phone: 210-805-8006. Email: email@example.com
BeerNet Radio: http://www.beernet.libsyn.com
We have a new mailing address:
909 NE Loop 410, Suite 720
San Antonio, TX 78209
BeerNet Communications, 909 NE Loop 410, Suite 720, San Antonio, TX 78209 USA
Unsubscribe | Change Subscriber Options