A company called 3G, the giant that owns AmBev, InterBrew and Anheuser-Busch, has announced its desire to takeover SABMiller.
The world’s largest brewer is jockeying to become even bigger.
A company called 3G, the giant that owns AmBev, InterBrew and Anheuser-Busch, has announced its desire to takeover SABMiller. Should the two combine, the resulting powerhouse, some industry analysts say, would have the clout to snatch up other companies on par with Coca-Cola or PepsiCo.
While full details of the proposal have not yet been released, SABMiller has confirmed speculation that a proposal is forthcoming. The company announced in an official statement that it has been approached by 3G, but noted that “no proposal has yet been received.”
Formal offer or no, news of the potential merger sent SABMiller’s stock skyrocketing some 22%. That surge added nearly $13 billion to its overall market value in a matter of minutes.
Industry analysts have been chiming in about the potential merger since news of 3G’s intentions went public. Though a price tag on the deal hasn’t been established by 3G, analysts have speculated that any offer would likely exceed $103 billion considering SABMiller’s $90 billion market value.
Obstacles to Overcome
Operating under the motto “dream big,” 3G has successfully negotiated a number of high-profile takeover deals in recent years. Its 2008 takeover of Anheuser-Busch was just the beginning for the firm, which now has orchestrated deals involving H.J. Heinz and Burger King, among others.
While 3G has a number of victories to its credit, the move to gobble up SABMiller has obstacles to overcome before it may materialize.
First off, the company has to make that offer. 3G has only until Oct. 14 to make a formal proposal to take over the London-based SABMiller. It must also secure the financing for the purchase while dealing with potentially resistant investors.
Winning favor from regulators in the United States, Europe and China may also prove to be a formidable obstacle, the New York Times pointed out.
“The competitive harm is pretty scary,” American Antitrust Institute President Diana Moss was quoted by the Times as saying. Fear of higher prices in the consumer market may force the sell-off of some of SABMiller’s brands or assets, analysts say.
What the Future Holds
Uncertain outcome aside, a successful merger between 3G and SABMiller could have big impacts across other industries in the coming years, some say.
A combined 3G/SABMiller, for example, would likely have the financial clout to make a purchase as big as Coca-Cola down the road. That move would knock down a longstanding tradition of soft drink and alcohol manufacturers in the United States remaining separate.
Though a takeover as large as Coca-Cola would require dominoes to fall into place perfectly over the next few years, analysts speculate such a maneuver wouldn’t be out of the realm of possibility for a larger, more powerful 3G.
Sanford Bernstein analyst Ali Dibadj explained to Reuters that a successful merger would SABMiller would make 3G larger and even more powerful. That, in turn, would enable 3G to dream even bigger, something the company already has a reputation for doing very well.
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