AB InBev, SABMiller deal wins US approval
The Department of Justice approval comes with a number of stipulations and is notable after the regulatory authority derailed several recent mega-mergers over antitrust concerns.
The Belgian brewer will make concessions beyond its publicly stated offer to sell SAB's stake in MillerCoors, its U.S. joint venture with Denver-based Molson Coors as part of the deal. AB InBev will also have to curb its use of incentive programs to limit competition.
Reuters previously reported that the DOJ was investigating AB InBev's practice of financially rewarding beer distributors for selling more of its own beer than its competitors. Craft beer companies had vocally objected the practice, which they argued hurt their ability to sell.
"Independent distributors that sell (AB InBev’s) beer will have the freedom to sell and promote the variety of beers that many Americans drink," Deputy Assistant Attorney General Sonia Pfaffenroth of the Justice Department's Antitrust Division said.
The world's top two brewers hold brands Budweiser, Stella Artois, Miller and Pilsner Urquell.
"While we will make some adjustments to certain aspects of our U.S. sales programs and policies, our fundamental approach and commitment to this market will not change," said AB InBev Chief Executive Officer Carlos Brito in a statement.
AB InBev will also be required to secure the DOJ's approval before acquiring any beer distributors or craft beer brands.
AB InBev has already acquired several regional craft beer companies, looking to benefit from a rapidly growing niche market in the slowing beer industry. Recent deals include Colorado-based Breckenridge Brewing, Oregon-based 10 Barrel Brewing and Virginia-based Devil’s Backbone Brewing Company.
"The DOJ’s significant requirements... appear to address some of our major apprehensions with the merger. With effective enforcement of these provisions, small brewers can rely on their independent distributor partners to access the market," Bob Pease, president and chief executive officer of the Brewers Association, said in a statement on Wednesday.
Terms of AB InBev's agreement with the Justice Department expire in 10 years. Nampa/Reuters
AB InBev will also divest the rights to all SABMiller beer brands currently imported or licensed for sale in the United States.
Denver-based Molson Coors Brewing Co (TAP.N) will buy SAB's 58 per cent stake in their U.S. joint venture, MillerCoors. Molson closed up 3 per cent at $100.80 on Wednesday.
The deal changes little within the U.S market, according to Adam Fleck, equity analyst with Morningstar in Chicago. Still, he added "There's a chance to increase the profitability for Molson Coors and MillerCoors enterprises that will make MillerCoors more competitive."
The Belgian brewer will make concessions beyond its publicly stated offer to sell SAB's stake in MillerCoors, its U.S. joint venture with Denver-based Molson Coors as part of the deal. AB InBev will also have to curb its use of incentive programs to limit competition.
Reuters previously reported that the DOJ was investigating AB InBev's practice of financially rewarding beer distributors for selling more of its own beer than its competitors. Craft beer companies had vocally objected the practice, which they argued hurt their ability to sell.
"Independent distributors that sell (AB InBev’s) beer will have the freedom to sell and promote the variety of beers that many Americans drink," Deputy Assistant Attorney General Sonia Pfaffenroth of the Justice Department's Antitrust Division said.
The world's top two brewers hold brands Budweiser, Stella Artois, Miller and Pilsner Urquell.
"While we will make some adjustments to certain aspects of our U.S. sales programs and policies, our fundamental approach and commitment to this market will not change," said AB InBev Chief Executive Officer Carlos Brito in a statement.
AB InBev will also be required to secure the DOJ's approval before acquiring any beer distributors or craft beer brands.
AB InBev has already acquired several regional craft beer companies, looking to benefit from a rapidly growing niche market in the slowing beer industry. Recent deals include Colorado-based Breckenridge Brewing, Oregon-based 10 Barrel Brewing and Virginia-based Devil’s Backbone Brewing Company.
"The DOJ’s significant requirements... appear to address some of our major apprehensions with the merger. With effective enforcement of these provisions, small brewers can rely on their independent distributor partners to access the market," Bob Pease, president and chief executive officer of the Brewers Association, said in a statement on Wednesday.
Terms of AB InBev's agreement with the Justice Department expire in 10 years. Nampa/Reuters
AB InBev will also divest the rights to all SABMiller beer brands currently imported or licensed for sale in the United States.
Denver-based Molson Coors Brewing Co (TAP.N) will buy SAB's 58 per cent stake in their U.S. joint venture, MillerCoors. Molson closed up 3 per cent at $100.80 on Wednesday.
The deal changes little within the U.S market, according to Adam Fleck, equity analyst with Morningstar in Chicago. Still, he added "There's a chance to increase the profitability for Molson Coors and MillerCoors enterprises that will make MillerCoors more competitive."
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