AB InBev, SABMiller to Ask Another Extension for Takeover Offer

Anheuser-Busch InBev NV and SABMiller PLC plan to request on Wednesday another extension for a formal takeover offer as the companies seek more time to finish complex paperwork and continue talks on the sale of SABMiller's U.S. business, according to people familiar with the request.

It will be the second extension the companies have requested since announcing an agreement in principle on Oct. 13. An announcement is expected on Wednesday announcing the new deadline for a formal proposal.

AB InBev and SABMiller declined to comment. AB InBev last week said it had completed financing for the deal and conducted due diligence.

The latest extension highlights the complexity of a deal that would create a beer giant with a 28.4% share of the global beer market, according to industry tracker Plato Logic. It also illustrates AB InBev's interest in announcing a deal without having a solution to regulatory concerns in the U.S., where it has a 45% market share and SABMiller's joint venture MillerCoors LLC has a 25% share.

AB InBev is in talks to sell SABMiller's stake in MillerCoors to its joint-venture partner Molson Coors Brewing Co., according to people familiar with the matter. Molson Coors currently owns 42% of MillerCoors. As part of the joint-venture agreement, Molson Coors has a first right of refusal to buy MillerCoors, an option to top another offer by 5% and the right to name the company's chief executive.

The need to sell the SABMiller's business in the U.S. has taken on added importance as legislators raise concerns about AB InBev controlling 70% of the U.S. market. The top two lawmakers on the Senate Judiciary Subcommittee said on Oct. 20 that they will hold a hearing before the end of the year to evaluate how the merger will affect competition and U.S. consumers.

An AB InBev spokeswoman last month said the company would resolve regulatory issues like those in the U.S. "promptly and proactively."

The push to sell SABMiller mirrors AB InBev's approach during its last acquisition, a $20.1 billion takeover of the Mexican brewer Grupo Modelo. To address U.S. antitrust concerns about the deal, AB InBev on the same day announced a sale of the U.S. rights to Corona, Modelo Especial and other beers to Constellation Brands Inc.

In addition to the U.S., AB InBev's deal is expected to face antitrust scrutiny in China, where SABMiller has a 23% market share through its joint-venture with government-backed China Resources Enterprise Ltd., the maker of Snow, the world's biggest beer by volume. AB InBev has a 14% market share, with Budweiser and local brands like Harbin.

Antitrust experts and industry analysts think Chinese authorities would be reluctant to allow a foreign company to control more than a third of the market. They also have raised concerns about markets like Italy and the U.K. where the brewer may have to sell off rights to brands to reduce the market share of the combined brewers in those countries.

The company also has faced some resistance in South Africa where unions last month called on the government to reject the deal, saying it would affect tax revenue and job security.

Write to Tripp Mickle at [e-mail] and Shayndi Raice at [e-mail]

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November 03, 2015 17:55 ET (22:55 GMT)

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