JSE welcomes AB InBev, while US starts competition probe

Washington – US competition officials began an in-depth investigation of Anheuser-Busch (AB) InBev’s planned takeover of SABMiller [JSE:SAB], seeking additional information related to the deal.

The probe comes ahead of AB InBev’s R3trn listing on the Johannesburg Stock Exchange (JSE) on Friday, which it promised as part of its plan to win the takeover bid last year.

AB InBev agreed to buy SABMiller for £68bn (now R1.62trn) in October with a £44 (now R1048) offer. SAB’s share price on the JSE propelled from R610 in August to R966.53 by Friday.

The Justice Department’s (DOJ) antitrust division – as it is known in the US - recently issued a so-called second request to the beer maker, according to the company. The inquiry, a move by the Justice Department that was expected by the companies, lengthens the review of how the combination will affect competition and prices for beer.

“As expected with a transaction of this nature, we received a second request for information from the DOJ,” said Marianne Amssoms, a spokesperson for AB InBev. “We continue to work closely with DOJ to provide them additional information.”

Sign off needed from more countries

The Justice Department is among competition authorities across the world who must sign off on the takeover that combines the world’s biggest brewers. The enlarged company would account for about half the industry’s profit and almost a third of all beer sold worldwide.

To resolve antitrust concerns in the US, AB InBev, the maker of Budweiser, has agreed to sell SABMiller’s 58% stake in MillerCoors to joint-venture partner Molson Coors Brewing. By selling that stake, AB Inbev says the merger won’t harm competition in the US because its market share will remain the same.

Justice Department spokesperson Mark Abueg declined to comment on the investigation.

Beer distribution

Craft brewers have raised concerns about AB InBev’s control over beer distribution to consumers.

An association representing the brewers told a senate hearing in December that the Justice Department should require AB InBev to divest its company-owned wholesalers and change conduct that it says restricts distribution of rival products.

Distribution agreements, however, aren’t a key focus of the Justice Department’s review, according to a person familiar with the matter.

AB InBev and SABMiller still expect to close the transaction in the second half of this year, said the person, who asked not to be identified because the process isn’t public.