The Shout Magazine (New Zealand)

US clears AB InBev’s takeover deal

AB InBev is looking to sell Eastern European brandsThe US Department of Justice (DoJ) has cleared AB InBev’s proposed US$100 billion takeover of fellow brewing giant SABMiller.

The DoJ’s approval is one of the last major hurdles to the merger of the world’s first- and second-largest brewers.

There are some conditions attached to the DoJ’s approval and AB InBev is required to divest SABMiller’s entire US business – including SABMiller’s ownership interest in MillerCoors, the right to brew and sell certain SABMiller beers in the United States and the worldwide Miller beer brand rights.

In a statement about the deal, the DOJ said: “The settlement also prohibits ABI from instituting or continuing practices and programs that limit the ability and incentives of independent beer distributors to sell and promote the beers of ABI’s rivals, including high-end craft and import beers.

“Moreover, the settlement precludes ABI from acquiring beer distributors or brewers – including non-HSR reportable craft brewer acquisitions – without allowing for department review of the acquisition’s likely competitive effects.”

“The remedy we secured will help preserve and promote competition in the multi-billion dollar US beer industry,” said US deputy assistant attorney general Sonia Pfaffenroth of the Justice Department’s Antitrust Division.  “The two largest US brewers – ABI and MillerCoors – will now remain independent competitors after the deal.

“The settlement also preserves the ability of smaller brewers – including brewers of craft and import beers – to compete against ABI by protecting their access to important distribution networks.  Independent distributors that sell ABI’s beer will have the freedom to sell and promote the variety of beers that many Americans drink.”

AB InBev’s CEO Carlos Brito welcomed the news and said the company would continue investing and competing in the US.

“We will continue to invest heavily in the US,” Brito said. “Including our efforts to build our entire portfolio of brands, support and incentivise our wholesalers, and compete effectively in a dynamic and fast-changing market.

“While we will make some adjustments to certain aspects of our US sales programs and policies, our fundamental approach and commitment to this market will not change. We will continue to compete and win in the UU marketplace going forward.”

The DoJ approval comes almost one year after the two brewers confirmed they were in early negotiations regarding a takeover and comes after regulators in Australia, South Africa and Europe all gave their go ahead, subject to a variety of conditions. Europe has proved a particularly tough area for AB InBev, with the company agreeing to the sale of anumber of key Western and Eastern European brands.

AB InBev now faces one more regulatory obstacle in its proposed takeover – China – but it is expected the country will approve the deal in the next few months, after AB InBev agreed to the sale of the CR Snow joint venture.