Denver-based Molson Coors Brewing Co is in advanced stage of buying rest of the stake of SABMiller in Miller Coors LLC for $12 billion. This buyout will make the way clearer for $106-billion merger of SABMiller Plc and Anheuser-Busch InBev NV.
The UK-based SABMiller will sell its 58 percent stake in the US joint venture Miller Coors LLC. AB InBev has 45 percent market share in the US and Miller Coors has 25 percent. The stake sale in Miller Coors is expected to improve the chances of winning the regulatory approval in the US.
Belgian brewer Ab InBev has sought extension of time from the UK Takeover Panel to make a formal offer for SABMiller. AnHeuser-Busch InBev NV was looking for a buyer for SABMiller's Miller Coors stake before finalizing the bid offer.
Set up in 2008, Miller Coors LLC is a joint venture between Molson Coors and SABMiller. Miller Coors is the second largest brewer in the US. According to the joint venture agreement, Molson Coors has first right of refusal to buy the company in case SABmiller is put on the acquisition process.
In October, British brewery firm SABMiller and Ab InBev reached a preliminary agreement on $100-billion merger. The merger plan includes Miller brand globally.
The $100-billion merger deal is a game changer in the global brewery market. MillerCoors reported $7.85 billion sales in 2014 and this is almost double the net sales of Molson Coor's $4.15 billion. By buying the stake in Miller Coors, Molson Miller will get its Miller High Life, Miller Lite and Miller Genuine Draft brands as well.
These brands are popular in Canada as well. The agreement with SABMiller to market Miller brands in Canada is expired already and this is costing Molson Coors over $60million in sales.
The proposed $106-billion takeover offer from Anheuser-Busch InBev NV to SABMiller is considered to be the larger merger ever in the global brewing industry. The mega deal has been posing questions about competition norms in the US market.
By selling off SABMiller's stake in Miller Coors, the proposed merger of AB InBev and SABMiller is mostly get regulatory approval.
After the merger, Anheuser-Busch InBev is expected to hold 31 percent of the global beer market. This will become reality if antitrust regulators give green signal to merger proposal without any changes.
However, without offloading the stake of SABMiller in Miller Coopers, industry analysts feel that US Department of Justice and Federal Trade Commission wouldn't approve the merger plan. Miller Coors in September decided to close Eden, NC, brewery by September 2016. It has also decided to move production of seven breweries to five units.
The joint venture has 8,000 employees and brands include Miller Lite, Coors Light and Blue Moon in addition to smaller labels such as Hamm's. Molson Coors Brewing Co is leading the race for acquiring the SABMiller's stake in Miller Coors from the days of merger negotiations between AB InBev and SABMiller began in September.
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