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They Were Not Just Out For A Drink

16 September 2015 by lberuti

According to various press reports, Altria, which controls 27% of SABLN ( SAB Miller Plc ), recently pulled out of a conference appearance to follow up on a similar action by ABIBB ( Anheuser Busch Inbev SA ). People were quick to think something was brewing and today ABIBB confirmed it had made an approach to SABLN’s board. This acquisition would be the biggest in the industry history and would cap more than a decade of consolidation across brewing companies, as consolidation has been used as a way to stave off a slowdown in established markets such as Europe and the US. Even though a deal is currently much more affordable because the price action of SABLN’s has been weak over the last 6 months, the deal would likely cost ABIBB more than $100bln. If both the stocks of both company reacted positively, that is a big number and investors pushed ABIBB’s 5 year risk premium 11bps wider to 79bps, the most in almost 3 years.