Anheuser-Busch InBev’s US$20.1bn acquisition of Grupo Modelo is a “test case” in seeing how competition authorities would react to a “mega-merger” between the Belgium brewer and SABMiller, according to a new report.
The 81-page study – Global Beer: the Road to Monopoly – published by advocacy group the American Antitrust Institute, examines recent consolidation in the sector and assesses its future make-up. A-B InBev last week said it is “working proactively” with US regulators over the Modelo deal, having had approval in Canada, the UK and Mexico.
“The manner in which the DOJ (Department of Justice) treats the A-B InBev-Modelo transaction will provide clues to how it might treat a merger of the two leading suppliers of the US market and the world market,” the report says.
In July, A-B InBev’s CEO, Carlos Brito, argued that the combination of A-B InBev and Modelo will make “no change” to the US beer market.
On the long-rumoured merger between A-B InBev and SABMiller, the report highlights that “it is becoming more difficult for beer companies to expand their businesses without entering new markets and absorbing existing facilities”.
It adds: “Some analysts see this as a good geographic match for the two companies. A-B InBev is strong in North America and China. SABMiller has greater international presence, particularly in high-growth emerging markets in Latin America and Africa.”
However, the report’s author, Bernard Ascher, also flags one commentator’s view that a combination of the “bitter rivals” would be like “a merger of Catholics and Protestants”.
“The two giant firms are keen rivals with different strategies and business cultures,” Ascher says in the report. “Both firms, however, are publicly owned and need to show profits and growth to their stockholders at a time when it has become more difficult to grow without mergers and acquisitions”.
Ascher also suggests that further acquisitions of US craft brewers by larger companies is likely, following A-B InBev’s purchase of Goose Island last year.