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A-B Reportedly Trying to Finance SABMiller Deal

By: David Eisenberg - Brewbound - Date: 09/15/2014

The rumor mill knows little downtime.

After a few short months of relative inactivity, the mill’s blades are spinning again with the Wall Street Journal reporting that global beer giant Anheuser-Busch InBev is actively seeking financing for a possible takeover of SABMiller Plc.

A source close to the matter told the website that A-B is waiting to secure financing for the deal, valued at roughly $122 billion, before it starts any formal discussions with SABMiller.

The prospective deal, one investment banker told Brewbound, is all about international growth for the world’s biggest brewing company.

“This merger isn’t about the United States at all,” said Craig Farlie, managing director of the investment firm Farlie, Turner & Co. “It’s more about Africa and Latin America and bigger growth markets.”

Talk of the long-rumored merger picked up after SABMiller’s attempt to buy Heineken NV was reportedly snubbed over the weekend. That deal, added Farlie, would have effectively quelled the idea of a mega-merger between A-B and SABMiller.

“The prospective merger with Heineken would have made them roughly equivalent to the size of A-B InBev and it would’ve made it much harder for A-B InBev to buy either of those companies down the road,” he said. “But now that Heineken has turned that down, it leaves SABMiller kind of on their own.”

A-B InBev, adds the Journal, had a nearly 20 percent share of the global beer market in 2013, while SABMiller and Heineken had global shares of 9.6 percent and 9.3 percent respectively.

Considering such a deal would consolidate almost a third of the world’s beer supply, Farlie posits SABMiller would need to divest assets in the United States and in China in order to operate in accordance with antitrust laws should it be acquired by A-B InBev. But that’s more of a bump in the road than an insurmountable wall.

“I think [the possibility of a merger] is more realistic than I would say it has been in the last couple years,” said Farlie. “Because of performance in the stock market and how A-B has played down debt…I would sum this one up as, where there’s smoke, there’s fire.”

It’s worth noting, however, that on the heels of the Wall Street Journal report, CNBC’s David Faber refuted that A-B is in talks with banks to secure financing.

“[According to my sources] there is no talks with banks at this point by A-B InBev trying to put together any financing for SAB,” he said.

A spokesperson for A-B was unavailable for comment as of press time.

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