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New York - Anheuser-Busch (AB) InBev CEO Carlos Brito will try to ease concerns of US lawmakers about the brewer’s proposed $110bn acquisition of SABMiller [JSE:SAB], which would create an entity accounting for about half the industry’s profit and almost a third of all beer sold worldwide.
Brito, Molson Coors Brewing CEO Mark Hunter and other industry officials are scheduled to testify on Tuesday in Washington before a subcommittee of the Senate Judiciary Committee. The panel will review how the merger of the world’s two biggest beer producers would affect competitors and consumers. The combined company would hold the No 1 or No 2 positions in 24 of the world’s 30 largest beer markets.
As part of the deal, AB InBev plans to sell SABMiller’s 58% stake in MillerCoors to joint-venture partner Molson Coors for $12bn as it seeks to gain approval from the US Justice Department. The Senate subcommittee has no power to block the merger.
“The hearing suggests that there is still significant concern about the combination, even with the proposed fixes,” said Andre Barlow, a partner at Doyle Barlow and Mazard in Washington and a former Justice Department antitrust lawyer.
Craft brews
The merger plan has already drawn scrutiny from senators including Angus King, an independent of Maine, and Jeff Merkley, an Oregon Democrat, who wrote to the Justice Department with concerns that it could hurt the US craft beer industry.
Senator Ron Wyden, also an Oregon Democrat, wrote to the Federal Trade Commission with concerns over reports that AB InBev and its distributors may have acted to curb competition in markets including his home state of Oregon, where beer drinkers are suing to block the takeover.
“We look forward to the opportunity to discuss the highly competitive US beer market and how this transaction will extend the reach of AB InBev’s iconic American brands, such as Budweiser, to markets outside of the US,” AB InBev spokeswoman Marianne Amssoms said in a statement. Nothing in the transaction will change the strong growth of craft brewers, Amssoms said.
The Justice Department and the California attorney general are scrutinising AB InBev’s plan to acquire two distributors in that state, which could potentially hurt craft brewers’ representation in liquor stores. Last week, the Wall Street Journal reported that the brewer is offering distributors a $1.5m annual incentive if 98% of the beers they sell are AB InBev brands.
Andrew Holland, an analyst at Societe Generale, said Brito will tell lawmakers that there will be no change in the structure of the US beer market.
“The bottom line is that AB InBev will not gain one iota of market share in the US from the deal,” Holland said.
