9th Dec 2015 12:35
LONDON (Alliance News) - The proposed mega-merger of brewers Anheuser-Busch InBev NV and SABMiller PLC faced criticism on Tuesday as US lawmakers suggested the combination of the two largest beer companies in the world may hurt the country's burgeoning craft brewing industry.
AB InBev is acquiring SABMiller in a GBP71.0 billion deal which will create a company responsible for around a third of all beer sales globally and with a market share three-times larger than the third-biggest player in the industry.
The US Senate's Judiciary Committee's antitrust subcommittee held a hearing on the proposed merger on Tuesday, at which lawmakers weighed in with their views on the deal, as AB InBev Chief Executive Carlos Brito defended the transaction.
Senator Richard Blumenthal, one of the members of the subcommitee, said the so-called mega-mergers in the beer industry had been "good for shareholders but not so much for beer drinkers". In line with the rest of his colleagues, Blumenthal also listed a number of craft brewers based in his home state which could suffer from the combination of the two giants.
"This merger would clearly break the law," Blumenthal said. "Whether a remedy can be fashioned is the million, or I should say billion-dollar question."
AB InBev and SABMiller have already proposed a significant remedy in order to try and get the support of antitrust regulators in the US with the USD12.0 billion sale of SABMiller's 58% stake in its MillerCoors joint venture to Molson Coors Brewing Co, its partner in the business.
Last week, AB InBev also took a step towards attempting to quell any potential opposition to the deal in Europe by saying it would look at selling SABMiller's Grolsch and Peroni brands, along with Meantime, the Greenwich-based craft brewer SABMiller only bought earlier this year.
Brito was defiant in the face of the subcommittee's concerns, however, saying that, if anything, the deal would "create an even more competitive landscape" in the US by strengthening Molson Coors, making it a more robust competitor.
He also reiterated a key strategic rationale behind the deal, namely giving AB InBev access to higher-growth markets in Africa where SABMiller already has a substantial presence. "This transaction is about new markets in the rest of the world, not the US," Brito said. He added that, by divesting the MillerCoors joint venture stake, AB InBev's market share in the US will remain the same after the deal.
Brito also disputed the notion the deal will harm craft brewers, noting statistics from the Brewers Association forecasting craft beer will account for around 20% of the US beer market by 2020, up from 11% in 2014. He also said the beer industry is facing increasing challenges from the wine and liquor market and cited statistics showing beer sales as a percentage of total alcohol sales has fallen since 2009.
SABMiller shares were up 0.6% to 4,044.00 pence on Wednesday.
By Sam Unsted; [email protected]; @SamUAtAlliance
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