Half the world’s beer comes from four companies

October 28, 2013

Reuters reports  this morning that the world of big brewers could become even more consolidated. The timing may be right for the long-rumored $100 billion merger between Anheuser-Busch InBev and SABMiller, Philip Blenkinsop and Martinne Geller report:

“…with AB InBev planning to return to a comfortable pre-deal debt-to-EBITDA ratio of below two next year, industry experts are betting on a combination of its Budweiser and Stella Artois brands with SABMiller’s Peroni and Grolsch. Some expect a deal within a year.

“It’s more a question of when, not if,” said a banker who has worked on drinks deals. Others, also speaking on condition of anonymity, cited AB InBev’s record as a serial acquirer and the need for a target to match or surpass its $52 billion purchase of Anheuser Busch in 2008.

AB InBev has grown from a small Belgian brewer, with roots dating back to 1366, into a powerhouse with 17 billion-dollar brands and a Brazilian-led management based in New York.”

Experts worry that the deal could run afoul of anti-trust regulators in the US and China, Reuters reports.

Still, a big beer merger may end up being good for beer prices, Lydia DePillis noted in August, citing a study by the National Bureau of Economic Research. “The efficiencies from broader production and distribution networks offset the incentive to raise prices,” she wrote. “Which probably means: Don’t worry too much about price gouging, at least over the long term.”

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