Stake in MillerCoors JV sold to Molson Coors for $12 billion
Clearing the way for the agreement was a deal for SABMiller to sell its 58% stake in its MillerCoors LLC joint venture to partner Molson Coors Brewing Co. for $12 billion. SABMiller’s interest in MillerCoors loomed as a regulatory hurdle in gaining approval for its acquisition by AB InBev.
Both agreements were announced Wednesday. Last month, AB InBev and SABMiller said they had agreed in principle on an acquisition deal valued at approximately $106 billion. SABMiller had rejected a $104 billion offer from AB InBev about a week earlier.
“We are excited about our agreement on the terms of a recommended acquisition of SABMiller to build the world’s first truly global brewer. We believe this combination will generate significant growth opportunities and create enhanced value to the benefit of all stakeholders,” AB InBev chief executive officer Carlos Brito said in a statement. “By pooling our resources, we would build one of the world’s leading consumer products companies, benefitting from the experience, commitment and drive of our combined global talent base. Our joint portfolio of complementary global and local brands would provide more choices for beer drinkers in new and existing markets around the world.”
AB InBev’s offer of £44 per share ($67) represents a premium of about 50% to SABMiller’s closing share price on Sept. 14, the last business day prior to renewed speculation of a bid by AB InBev.
Under the agreement, SABMiller shares will be acquired by Newco, a new company formed for the transaction, in exchange for the issue of Newco shares to SABMiller shareholders. AB InBev will acquire the Newco shares of former SABMiller shareholders to satisfy the deal’s cash portion and then merge into Newco, which will become the holding company for the combined group. Newco will have its headquarters in Brussels, Belgium, where AB InBev is currently based.
Together, AB InBev and SABMiller — the world’s largest and second-largest brewers, respectively — account for about a third of global beer production and roughly 70% of the U.S. market.
Leading beer brands from AB InBev include Budweiser, Corona, Stella Artois and Beck’s. London-based SABMiller has a brand lineup that includes Miller Genuine Draft, Coor’s, Peroni, Foster’s and Milwaukee’s Best.
“SABMiller has an unmatched footprint in fast-growing developing markets, underpinned by our portfolio of iconic national and global brands. However, AB InBev’s offer represents an attractive premium and cash return for our shareholders and secures earlier delivery of our long-term value potential, which is why the board of SABMiller has unanimously recommended AB InBev’s offer,” SABMiller chairman Jan du Plessis stated.
Alan Clark, CEO of SABMiller, noted that the acquisition reflects his company’s aims for furthering worldwide growth. “Listing on the London Stock Exchange in 1999 was the launchpad for our global ambitions, leading to the creation of the No. 2 global brewer,” according to Clark. “The SABMiller story is a simply amazing achievement, and everyone who has been a part of it should feel immensely proud of the value they have helped to create. I am sure the next chapter will bring new opportunities for exceptional success.”
In buying SABMiller’s majority stake in MillerCoors, Denver-based Molson Coors will also acquire full ownership of the Miller brand portfolio outside of the United States and retain the rights to all of the brands now in the MillerCoors portfolio for the U.S. market, including Redd’s and import brands such as Peroni and Pilsner Urquell.
The $12 billion transaction is conditioned on the closing of AB InBev’s acquisition of SABMiller, expected to be finalized in the second half of 2016.
Molson Coors’ brand roster includes Coors Light, Molson Canadian, Carling, Staropramen and Blue Moon across the Americas, Europe and Asia. The company expects the buyout of the remaining interest in MillerCoors to add about $4.7 billion in incremental revenue, giving it overall sales of more than $12 billion.
“This transaction is a game-changing opportunity for Molson Coors and advances our ambition to be the first choice for consumers and customers. In consolidating ownership of MillerCoors, we will strengthen our presence in the highly attractive U.S. beer market, further improve our global scale and agility, benefit from significantly enhanced cash flows and capture substantial operational synergies. Furthermore, the acquisition of the Miller brand rights globally will help accelerate Molson Coors’ growth strategy by strengthening our international beer portfolio with a powerful and authentic American brand, as well as expand our presence in high-growth markets,” commented Mark Hunter, president and CEO of Molson Coors.
“In short,” Hunter added, “we will be a more competitive global company, better positioned to invest behind our core brands, expand our above-premium portfolio, strengthen our commercial execution capabilities and deliver long-term shareholder value.”