Belgium & USA: InBev, Anheuser-Busch shares rose after a reported merger talk
Shares of Anheuser-Busch and Belgian-Brazilian brewer InBev climbed after a Brazilian newspaper reported the two have held preliminary merger talks to create what would be a worldwide brewing giant, MarketWatch reported February 15.
According to the report in Valor Economico, which cited an unnamed source, InBev is keen to hold talks about joining with the maker of Budweiser since its market capitalization surpassed that of Anheuser-Busch's at the turn of the year.
Anheuser-Busch's market capitalization as of Wednesday was $38.6 billion, while InBev, which brews Stella Artois, Brahma and Beck's among others, was $41.9 billion (32.3 billion euros).
The two would be complementary, with InBev focused on Latin America, Canada and Europe while Anheuser-Busch is the dominant producer in the stagnant U.S. market and also has sizable Mexican operations.
"Strategically, an Anheuser-Busch/InBev tie-up would be positive as the new entity would combine the largest U.S. brewer with the largest international brewer by volume," said Bryan Spillane, an analyst at Banc of America Securities, in a note to clients.
Anheuser Busch shares climbed 3.2%, or $1.62, to $51.85 in opening trading.
InBev rose as high as 10%, and in afternoon Brussels trades had gained 4.2% to 52.90 euros.
The newspaper said Anheuser-Busch and InBev officials declined to comment. Neither Anheuser-Busch nor InBev on Thursday returned messages seeking comment.
Banc of America's Spillane said it's difficult to imagine how such a deal would be structured – whether it would be a merger of equals or an acquisition – and who would run the combined company, given both firms have established management teams. "Some co-managing relationship might make sense given the expertise each company has in their respective market," he said.
A merger between Anheuser-Busch Cos. and InBev NV could prompt SABMiller Plc and other beermakers to consolidate, according to analysts at Bear Stearns Cos. and JPMorgan Cazenove.
“Should this deal take place, it would certainly have knock-on effects in the rest of the industry,'' said Matthew Webb, an analyst at JPMorgan Cazenove in London, in a note dated Feb. 15. “It would surely make the second-tier brewers, and particularly those without regional strongholds, question the sustainability of their independence.''
A possible combination of Anheuser and InBev “pushes the combination of SABMiller, Femsa and Heineken even closer together,'' wrote Carlos Laboy, an analyst at Bear Stearns.
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