AB InBev, SABMiller to Combine in $107 Billion Transaction

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Researched by Industrial Info Resources (Sugar Land, Texas)--The global beer market is brewing up a storm with the agreement by SABMiller (London, England) to be acquired by AB InBev (NYSE:BUD) (Leuven, Belgium). AB InBev is offering to pay a total of 68.5 billion pounds ($107 billion) for SABMiller, at current prices. Industrial Info is tracking more than $5.7 billion in capital expenditures to expand or build new breweries at sites in the U.S. and Latin America.

Cigarette-maker Altria (NYSE:MO) (Henrico County, Virginia), SABMiller's largest shareholder, with a 26.6% stake, has indicated it would not block the deal. Colombia's Santo Domingo family is the second-largest shareholder with nearly 14%.

The companies have until October 28 to reach a formal agreement under British mergers-and-acquisition rules. The combined firm would be headquartered in Belgium.

Significant regulatory hurdles lie ahead for the proposed merger, particularly in the U.S., where the companies would have about 70% of the beer market. In particular, the deal is expected to result in Molson Coors (NYSE:TAP) (Denver, Colorado) acquiring SABMiller's 58% stake in their U.S. joint venture.

The deal would give AB InBev more breweries in Latin America and Asia, and open up new growth markets in Africa. AB InBev owns some of the best-known brands of beer in the Americas, including Skol (Brazil), Brahma (Brazil) and Quilmes (Argentina), and Budweiser and Labatt in the U.S. and Canada, respectively.

The "big four"--AB InBev, SABMiller, Heineken (Amsterdam, Netherlands) and Carlsberg Group (Copenhagen, Denmark)--brew more than half of the world's beer.

The impact of such a combination will spill over into other segments of the Beverage Industry. In the soft drinks sector, SABMiller is a large distributor for The Coca-Cola Company (NYSE:KO) (Atlanta, Georgia), while AB InBev has ties with rival PepsiCo Incorporated (NYSE:PEP) (Purchase, New York).

Industrial Info's database of active capital and maintenance expenditures in the Food & Beverage Industry, including the Sugar Processing Industry and Water Desalination Segment worldwide, shows current expenditures of $70 billion and more than 5,000 active projects. The U.S. portion comes out to more than 2,500 active projects that total more than $33 billion.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and ten international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.