Beer giants AB InBev and SABMiller agree to merger


The world’s two biggest beer producers – AB InBev and SABMiller – have reached a preliminary agreement on a merger worth an estimated 93 billion euros. SABMiller gave the nod to the deal after four previous attempts by the other company; SABMiller is the owner of dozens of breweries worldwide including one of the most famous in the Czech Republic, Pilsner Urquell.

Photo: archive of Plzeňský PrazdrojPhoto: archive of Plzeňský Prazdroj Czech news website iDnes put it simply: one could scarcely imagine a more significant deal. By buying up SABMiller, AB InBev will gain footholds on, or significantly boost its market share in, Africa, North America, and central and eastern Europe. According to Bloomberg and other news sites Tuesday, the deal will be worth a whopping 68 billion British pounds – the equivalent of 2.5 trillion Czech crowns, provided it goes ahead.

Both sides have reached a preliminary agreement for now, with InBev set to pay 44 British pounds per share. If the deal goes through to completion, the Belgian-American giant will gain four major brands on the Czech market: Pilsner Urquell, Gambrinus, Radegast and Velkopopovický kozel. According to iDnes, every third beer sold in the world will be from AB InBev. The world No. 1, the daily notes, in the past tried but failed to acquire the Czech brewer Budějovický Budvar; most famously, the two firms have clashed for years in David vs Goliath legal battles over the use of the Budweiser name.

Instead, Anheuser Busch InBev will acquire what many consider to be the “golden goose” of Czech beers, Pilsner Urquell – iDnes noted that shareholders last year were paid out dividends of 3.3 billion crowns – almost the entire profit the firm registered between April of 2014 and this March.

In terms of early reaction, iDnes interviewed Tomáš Maier of the Czech University of Life Sciences, said he did not expect major changes on the Czech market and suggested the new owner would not unload the Czech portfolio which he called financially very successful. Other experts point out the deal between the beer giants could significantly boost Czech brands’ international sales.

Czech University of Life Sciences’ Tomáš Maier, meanwhile, also suggests the new emerging giant could run into problems with antitrust offices in some countries – most significantly in the US. That would not be the case in the Czech Republic, given the lack of a major AB Inbev footprint before now.