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LONDON — Anheuser-Busch InBev (A-B) finalized an agreement to purchase SABMiller for $107 billion on Wednesday.
To ease antitrust concerns, SABMiller will sell its 58-percent stake in a venture with Molson Coors for $12 billion. This sale includes global rights to the Miller brand name and gives Molson Coors full control of operations. Molson Coors will also have the rights to other brands sold in the United States including Redd's, Peroni and Pilsner Urquell.
The sale also includes the global Miller brand, currently sold in more than 25 countries — including Canada, Colombia, Czech Republic, Ecuador, Mexico, Panama, Romania, Russia, South Africa and the United Kingdom — as well as related trademarks and other intellectual property rights.
A-B will also need to address regulatory issues in China, where SABMiller holds a 49-percent stake in the Chinese beer Snow.
The deal is expected to be complete in the second half of 2016. The post-merger company does not yet have a name.
“Our combination with SABMiller is about creating the first truly global beer company and bringing more choices to beer drinkers in markets outside of the U.S.," said AB InBev CEO Carlos Brito. "We are pleased to have reached this agreement with Molson Coors to divest SABMiller’s U.S. assets. We will continue to proactively address any regulatory concerns regarding our combination with SABMiller in other relevant markets.”
As changing tastes and the growing craft beer market eats into sales in developed markets, A-B is looking to boost growth through the purchase of SABMiller's Africa and Asia businesses.
"The transaction would strengthen AB InBev's position in key emerging regions with strong growth prospects such as Asia, Central and South America, and Africa," A-B said in a statement. "These regions have hugely attractive markets and will be critically important to the future success of the combined group."
Altria Group Inc., one of the two largest SABMiller shareholders at 27 percent, announced its support of the transaction.
"Altria fully supports this transaction, and we strongly believe that the deal is in the best interest of our shareholders," said Marty Barrington, Altria chairman, CEO and president. "Upon closing, Altria will continue to participate in the global brewing profit pool as a large and significant shareholder in what will be the industry's largest company. We continue to work constructively with the parties toward closing, and we look forward to working with the A-B InBev management team at the new, combined company."
Once the deal closes, Altria expects to receive an approximately 10.5-percent stake in the combined company and approximately $2.5 billion in cash. It also expects to hold two seats on the new board of directors and continue to use equity accounting for the beer asset's contribution to its earnings. Additionally, the closing price should give each Altria shareholder an implied value of $63 per share in cash and stock in A-B, according to Wells Fargo Securities LLC.
"We believe this deal will create value for [Altria] shareholders," wrote Bonnie Herzog, managing director of tobacco, beverage and convenience store research at Wells Fargo Securities.
Mark Hunter, president and CEO of Molson Coors, added: “SABMiller has been an excellent partner for the past seven years and we are extremely proud of the organization that our teams have created. We have a deep passion for and understanding of the MillerCoors brands, strategy and culture and believe this transaction is the ideal outcome for this business. We look forward to continuing to provide our distributors, retailers and consumers with an extraordinary portfolio of brands.”