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After receiving more time to finalize its offer to acquire SABMiller, Anheuser-Busch InBev made a formal $107 billion bid for the company on Tuesday. The deal includes a record $75 billion loan and confirms the anticipated divestiture of SABMiller’s stake in its largest brand: MillerCoors.
AB InBev announced the finalized deal [PDF] outlining plans for SABMiller to sell its 58% stake in MillerCoors to its joint-venture partner Molson Coors Brewing, which already owns 42% of the brand, for $12 million.
The companies say the massive sell-off plan [PDF] is meant to “promptly and proactively address regulatory considerations.”
The fate of the MillerCoors brand was one of the largest concerns for antitrust experts who widely agreed that regulators would not approve the deal without the divestiture. If AB InBev and SABMiller were to merge without selling off that stake in MillerCoors, the combined company would control an astounding 70% of the U.S. beer market.
The deal to sell MillerCoors to Molson is contingent on the completion of the SABMiller/AB InBev deal and is expected to close in mid-2016.
Molson Coors is backing the acquisition with a fully committed debt financing from Citigroup, Bank of America Merrill Lynch and UBS, Reuters reports.
Antitrust experts previously told Consumerist that any deal to sell the MillerCoors brand would continue to receive antitrust scrutiny, as Molson would then have a 26% stake of the beer market: owning full control over brands like Coors Light and Blue Moon, as well as import brands such as Peroni and Pilsner Urquell, would bring the company’s concentration of the market “beyond acceptable levels.”
Still, AB InBev and SABMiller say they’re ready to prove the sale and its merger are above-board.
“We are pleased to have reached this agreement with Molson Coors to divest SABMiller’s U.S. assets,” Carlos Brito, Chief Executive Officer of AB InBev, said in a statement. “We will continue to proactively address any regulatory concerns regarding our combination with SABMiller in other relevant markets.”
In addition to finalizing the mega beer merger, AB InBev announced it had lined up $75 billion in financing from banks. The loan represents the largest commercial loan ever.
As Reuters notes, AB InBev’s loan eclipses the previous record held by Verizon Communications, which raised a $61 billion bridge loan in 2013 to back its purchase of the remaining 45% stake in Verizon Wireless that it did not already own.
According to the companies, the deal gives the Belgian and Brazilian families that control AB InBev a diluted ownership of about 34.5%, down from their more than 50%. The groups will receive nine seats on the 15-seat board.
SABMiller’s largest shareholders – cigarette giant Altria and the Santo Domingo family of Colombia – will own 16.5% of the combined company.
AB InBev backs SABMiller buy with record $75 bln loan [Reuters]
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