Anheuser- Busch InBev, the largest brewing operation in the world, has reportedly been in talks to purchase the second largest brewer, SABMiller, in what would be one of the largest takeovers in corporate history.
According to the Brazilian news website IG, SABMiller has been talking with Anheuser- Busch InBev for some time about a potential sale of the business to its larger foe. Spokespersons on both ends decline to comment on the deal, but SABMiller shares spiked in price last week when the news hit the street.
The thought of a merger of any type between Anheuser- Busch InBev and SABMiller doesn’t sit well with many people for numerous reasons. For one, the partnership reeks of potential monopoly. Both companies are already very big and the idea of them becoming one would be like Toyota purchasing Ford Motor. These two businesses are not based in the United States anymore so any merger between the two would not be subject to U.S. anti- trust overview, but it still concerns some people just the same.
Then, there is the mere idea of old rivalries joining together in unison. As anyone in the United States knows, Miller and Anheuser- Busch were bitter rivals for decades and the thought of these two enemies becoming a single company just doesn’t feel right. Add to this the fact that SABMiller owns a portion of Molson Coors and the feelings of uneasiness become even more vivid. Anheuser- Busch, Miller, and Coors products sold by the same company?- the thought sends shivers down my tall boy.
Most financial analysts say there is no reason to worry about this deal going through because, among other things, the cost would be staggering. Anheuser- Busch InBev would have to cough up somewhere in the neighborhood of $70 to $100 billion to seal a deal this large. InBev had to borrow a huge sum of money when it purchased Anheuser- Busch back in 2008 and, as of June 30, 2011, still has more than $40 billion in debt. Given a debt load this large, coupled with the difficult global economy, it is unlikely that Anheuser- Busch InBev would be able to purchase its closest rival, even if it wanted to.
No one has confirmed or denied any rumors yet, so there is still an outside chance that this marriage may actually reach consummation. I don’t believe it will, but be prepared for the pitter-patter of Anheuser- Busch/Miller/Coors feet if the deal becomes reality.