AB InBev in merger talks with SABMiller

<p>Two of the world’s largest brewers are considering a tie-up.</p>

Two of the world's largest brewing companies – Anheuser-Busch InBev (AB InBev) and SABMiller - are discussing a possible merger. If the deal is successful, the resulting company would produce a third of the world's beer.

AB InBev includes brands like Budweiser, Stella Artois and Corona. It has 20.8 per cent of the global market share. SABMiller's product portfolio includes Peroni and Grolsch. It has 9.7 per cent of the global market share. Together, the two companies are expected to have a value of at least $230 billion (£150 billion), based on Tuesday's share price.

However, AB InBev has noted that there is no certainty that the two firms will reach an agreement. 

Analysts have anticipated a possible deal between the firms for some time, however AB InBev delayed the move due to high levels of debt caused by other purchases.

"Not a merger"

Commenting on the possibility of a deal between the two brewers, Larry Nelson, editor of trade magazine Brewer's Guardian said: "Let's get this straight, this is a takeover by AB InBev of SABMiller. It's not a merger."

He noted that given the size of the deal, both companies would probably have to sell off parts of their operations in order to get regulatory approval – this could mean sacrificing some of their business in the US and China.

"In the US, SABMiller has a joint venture with Molson Coors, which gives it a 25 per cent share of the market ant makes it a clear number two," Mr Nelson pointed out.

He explained that combining with AB InBev would result in a firm that has a 75 per cent market share in the US, "which is clearly untenable".

"AB InBev would not have gone into this without having some plan of what they want to divest," he added.

It's also likely that the merged company would work to move into faster growing markets like South Africa, South America and Mexico, reports the BBC.

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