A $104.5 billion deal between the world’s two largest brewers is being met with skepticism from regulators and alarm from microbreweries.
As a $104.5 billion deal between the world’s two largest brewers comes closer to fruition, the potential pairing of Anheuser-Busch InBev and SABMiller has some worried the move might knock the head off the craft brew industry.
AB InBev announced its intentions to take over United Kingdom-based SABMiller earlier this year. That announcement has prompted weeks of back and forth between the two beer giants in an effort to come to terms that are agreeable to both sides.
Four other proposals from AB InBev were shot down by SABMiller before this latest, $104.5 billion offer met a warmer reception. SABMiller’s board, in fact, unanimously voted to recommend the latest offer to shareholders, removing one obstacle standing in the way of the proposed merger.
While the SABMiller board is behind the merger, many obstacles still stand in the way. AB InBev must gain regulatory approval to ink the deal and its own shareholders must still accept the offer.
In addition, the Department of Justice and the California Attorney General are currently investigating AB InBev for alleged unfair business practices. The company is accused of buying up distributors in California with an eye on squeezing out competition from smaller brewers. It’s the latter that has craft brewers concerned about the potential pairing of SABMiller and AB InBev.
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AB InBev has adamantly denied any wrongdoing in regard to its California acquisitions, but some craft brewers fear the joining of the two largest brewers under a single umbrella could spell major trouble for them down the road.
With billions of dollars at the disposal of the proposed mega-brewer, questions exist among smaller brewers about the possible impacts on the availability of items needed to bring their products to market. From the availability of hops and aluminum cans to the expanded distribution channels the proposed mega company would enjoy, craft brewers are worried they’ll be squeezed out entirely.
Ingredient availability aside, craft brewers are also concerned an InBev/SABMiller conglomerate would have even more capital to snatch up independent breweries. AB InBev has already been doing so with its purchases of companies such as Golden Road Brewing and Blue Point.
“Everyone is holding their breath to see what ramifications come from this,” Chris Furnari, Brewhound’s editor, told Wired.
Just what the future holds for craft brewers if the deal goes through remains to be seen. The breath holding, however, may come to an end on Oct. 28. That’s the deadline the U.K. Takeover Panel has given for a firm merger offer to be made.
