Would Anheuser-Busch InBev consider buying SABMiller? And, could it?

Would Anheuser-Busch InBev consider buying SABMiller? And, could it?

Analyst group Credit Suisse has floated the idea of a US$71bn mega-merger between the world's two biggest brewers, Anheuser-Busch InBev and SABMiller.

A deal could make sense for both brewers if demand for beer continues to decline in mature western markets, Credit Suisse said yesterday (2 February). Competition issues in the US and China could be overcome via disposals, said the analyst group in a 22-page note entitled: "Is SAB-ABI the last piece of the puzzle?"

"We believe the continuing ills of the US domestic beer market – faltering brands, shrinking per capita consumption, competition from wine and spirits – may force ABI’s hand to make another acquisition after the cost cutting is complete and the company’s balance sheet has deleveraged," said Credit Suisse.

It said that the Stella Artois and Budweiser brewer's main rival, both in the US and in the global beer industry, "would be the most natural merger partner".

The group estimated that SABMiller would be worth $71bn, which would make the deal almost $20bn more expensive than InBev's record-breaking, $52bn acquisition of Anheuser-Busch in 2008.

Credit Suisse said that the brewers have "surprisingly-little competitive overlap" around the world, although it conceded that there will be serious regulatory concerns in the US and China. To satisfy authorities, SABMiller would likely have to sell its interest in MillerCoors to its joint venture partner, Molson Coors, and might also have to sell its 49% stake in CR Snow in China.

Both SABMiller and A-B InBev shareholders would profit from the deal, said Credit Suisse, although it said that SABMiller's motives for selling up look less compelling than A-B InBev's motive to buy. However, it pointed to generational change at the Peroni Nastro Azzurro brewer, with the expected retirement of CEO Graham Mackay within the next few years, as a potential window of opportunity.

The group said that the industry might have to wait several years for such a merger to take place.