SABMiller has reportedly rejected a 66.4 billion pounds ($100 billion) acquisition price target from Anheuser-Busch InBev (NYSE:BUD). This offer represents 40 pounds per share potential deal, which some consider too low of a bid, and others oppose due to fears of a monopoly in the brewing industry.
Beer is the most popular alcoholic beverage in the world, and at the moment, the industry can be viewed as a duopoly, especially in the United States. This duopoly formed very recently, when in 2008 Anheuser-Busch and InBev merged and the world’s largest brewing company was created - Anheuser-Busch InBev. Out of fear that Anheuser-Busch InBev will be impossible to compete against, two other companies joined forces, SABMiller and Molson Coors, who have combined their operations in the United States and Puerto Rico forming a joint venture – MillerCoors.
The two companies combined are now having almost a complete duopoly in the United States, with about 80% of all beer brands under their umbrellas. As for the global market, the two companies control about 40% of the beer industry.
According to Bloomberg, a merger between SABMiller and Anheuser-Busch InBev is met with opposition. Daniel Matjila, head of The Public Investment Corp., a South African state-owned pension fund manager who is SABMiller’s fourth-largest share holder, explained, “Quite frankly I’m not in favor of it… We may be creating some kind of a monopoly going forward which may have a serious impact on the global economy and beer market in general.”
This was an informal offer by Anheuser-Busch InBev, and it is possible that another higher bid for SABMiller will be reported sometime soon.