'Megabrew' Coming? A-B InBev Approaches SABMiller to Merge

Long-rumored Combination of Global Brewing Giants Could Be on its Way

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The long-rumored Anheuser-Busch InBev-SABMiller merger might finally be in the works. A-B InBev in a statement today confirmed that it has "made an approach to SABMiller's board of directors regarding a combination of the two companies."

The statement followed a similar statement form SABMiller in response to recent speculation in the media about the merger, which would create a global brewing behemoth. While SABMiller confirmed that it has been approached by its rival, it said that "no proposal has yet been received and the board of SABMiller has no further details about the terms of any such proposal."

A combination between the two would reshape the global brewing landscape, but it might not produce such a radical makeover in the United States. That is because it's highly doubtful that antitrust regulators would let the two brewers join forces in the U.S., where they would dominate the market with brands such as Bud Light, Miller Lite and Coors Light on the same team. In the states, Miller Lite and Coors Light are operated by MillerCoors, which is a joint venture of SABMiller and Molson Coors. So one scenario is that the newly merged company would have to unload SABMiller's stake in MillerCoors to Molson Coors.

A MillerCoors spokesman declined to elaborate on the SABMiller statement.

There has been talk of an A-B InBev-SABMiller tie-up for years, including in 2011.

In a report this morning called "The Courtship Dance to Create Megabrew Begins," Sanford C. Bernstein analyst Trevor Stirling noted that under U.K. rules, Anheuser-Busch InBev now has 28 days to make a formal offer. "There are clearly regulatory hurdles that would need to be scaled; in particular, the [U.S. Department of Justice] would almost certainly insist on the disposal of SAB's stake in MillerCoors in the USA. And ABI might also have to dispose of SAB's 49% stake CR Snow in China," he wrote. "But it is also likely that Molson Coors and CRE would be willing purchasers respectively."

In the U.S., A-B InBev is the nation's 22nd-largest advertiser, shelling out nearly 1.6 billion in 2014, while MillerCoors ranks 45th at nearly $890 million, according to the Ad Age Datacenter.

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