Anheuser-Busch/SABMiller Mega-Merger Gets Justice Dept. OK, After Miller Agrees To Sell All U.S. Brands
The $107 billion (with a b) merger of beer titans Anheuser-Busch InBev and SABMiller has cleared a major hurdle today, with the U.S. Justice Department signing off on the merger — under the condition that Miller divest itself of all its remaining U.S.-based businesses.
SAB Miller is currently a 58% owner of MillerCoors, which handles the Miller brands stateside. In Nov. 2015 — in anticipation of regulatory scrutiny — the company reached an agreement with partner Molson Coors (owner of the remaining 42% of MillerCoors) to sell its ownership stake for $12 billion.
SABMiller must also divest itself of the worldwide rights to Miller Beer brands, meaning SABMiller will no longer sell any Miller products once the merger is complete.
For its part, AB InBev must stop its questionable practice of providing anticompetitive incentives — like covering marketing costs for distributors who kept a strict limit on non-AB InBev products.
AB InBev will also now be under the regulatory spotlight for all future acquisitions. In recent years, the company has been on a tear, scooping up smaller brands and companies in deals that didn’t always merit federal antitrust review. However, any brewer or distributor acquired by AB InBev going forward could now go under DOJ’s microscope before being finalized.
The conditions of the mega-merger are technically the settlement to a DOJ antitrust lawsuit filed today in federal court. [PDF]
Had the merger been able to proceed without the conditions, alleged the DOJ, the SABMiller acquisition would have concentrated 70% of the U.S. beer market under one company’s control. In some markets, that concentration would be as high as 90%.
In effect, the sale of all Miller brands and licenses in the U.S. means that AB InBev will have to continue to compete against another sizable contender, just now in the form of Molson Coors — not to mention having to stave off the growing number of craft beer competitors, none of which AB InBev can purchase without triggering an antitrust alarm.
The mega-merger has already been greenlit by regulators in other parts of the globe, including South Africa (home to the SAB part of SABMiller) and Europe (where SABMiller had to sell off a bunch of brands for $8 billion). Miller also agreed to sell off its ownership stake in CR Snow, China’s largest brewer, in an effort to gain approval of the deal.
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