Fun with A-B and InBev

I – and apparently most of the world`s financial markets – just love this Anheuser-Busch/InBev hostile takeover rumour. And really, who wouldn’t? The whole thing has all the tension and excitement of a prime time television cliff hanger.

Of course, since neither player is saying anything right now, save for some speculative comments by Adolphus Busch IV as reported in the Wall Street Journal, any consideration of the ramifications of such a deal are nothing more than idle speculation. So let’s speculate...

Scenario 1: Let’s say InBev does acquire – sorry, merge with – A-B, thus creating by far the world’s largest brewer in terms of both volume and revenue, as well as a seriously potent force in the U.S. beer market. Stands to figure that number two, SABMiller, would want to pull some strings to remain apace, and the logical first such move would be a consummation of its relationship with Molson-Coors already started in the U.S. market. End result: Two massive players effectively sharing the vast bulk of the lucrative North American market (including Canada, since InBev already owns Labatt), and no doubt beating the hell out of each other in a protracted battle for share.

Scenario 2: A-B fights back and beats down the InBev bid, causing the Belgians to look not to America, but London for a merger buddy, specifically the aforementioned SABMiller. The global beer powerhouse these two would create would be daunting in size, and an obvious call to action for Heineken and Carlsberg, who just finished carving up the carcass of Scottish & Newcastle. Again, Molson-Coors would be an attractive acquisition, albeit a tricky one given their existing ties with SABMiller, along with FEMSA Cerveza of Mexico and Sapporo and Asahi of Japan, although with their limited international holdings, these last three would likely be of lesser interest.

Scenario 3: Rather than let InBev run away with the prize, SABMiller digs in and makes its own play for A-B. American competition authorities could put a stop to this, since it would create an entity which would control roughly 70% of the market (if the deal with Molson-Coors is unravelled at the same time), or they could take as an example the Brazilian merger that created AmBev (before that company in turn merged with Interbrew and created InBev) and decide that a single dominating brewer is not necessarily a bad thing.

And so on, and so on. Of course, as noted above, all this is just idle speculation, but that doesn't make it any less fun.

Comments

[zuffranv]

What's on tap now for Budweiser? CNBC takes you inside America's 130-year love affair with the King of Beers. Now that InBev has agreed to purchase the iconic American brand, CNBC's "American Originals: Budweiser" offers a first look at the new reality for Bud. Watch CNBC on Thursday, July 17 at 9p/12a ET to see the side of Budweiser you've never seen before... the past the present and the future. Click here for web highlights.
http://www.cnbc.com/id/25348737/?__source=bg|pst|budprem|07102008|&par=bg

Hope you enjoy, let me know if you would like more info!

[Joel]

Hurm ... the link is missing:
http://www.law.com/jsp/article.jsp?id=1202421748634

[Joel]

I don't know how often you skim the news from other niches sites, but InBev crops up on Law.com via the Fulton County Daily Report: "InBev GC: Six Simple Rules for Winning My Business"