Competitive Intelligence

InBev: Belgium's Interbrew Acquisition of Brazil’s AmBev Surpasses Anheuser-Busch to Become World’s Largest Beer Maker

With number one or two positions in 20 key global markets and 13 percent of the world’s beer brewing volume, Interbrew’s purchase of AmBev has created the new powerhouse worldwide beer competitor: InBev.

Shareholders voted in favor of the deal at an extraordinary meeting in Brussels, bringing Interbrew one step closer to creating a global behemoth with brands such as Stella Artois, Bass, Beck's, Brahma, Rolling Rock and Skol.

Interbrew shareholders approved the first in a series of resolutions enabling the deal, allowing Interbrew to give AmBev's controlling shareholders 141.7 million shares in the new company in return for their stake in the Brazilian brewer.

The deal, valued at about 8 billion euros ($9.66 billion), will close once AmBev shareholders give it their blessing at a meeting in Sao Paulo.

"The transaction creates a global platform for the combined group to develop its three global flagship brands, Brahma, a top-ten brand worldwide, and what we believe are the two fastest growing international brands, Stella Artois and Beck's,'' Interbrew said in a statement.

The deal allows Interbrew access to Latin America, where it had scant presence in the past. AmBev gains the opportunity to expand outside of the Americas.
European regulators have already approved the deal.

Although Brazil's main Cade anti-trust watchdog has yet to rule on it, its head has said it appeared to pose no competitive threat to rivals.

The approval was expected given that the controlling shareholders of Interbrew and AmBev created with the deal.

They will remain firmly in control of the new company and have equal representation on its 14-member board.

The free float, however, will fall to 26.2 percent from Interbrew's 35 percent and 23 percent at AmBev, also known as Companhia de Bebidas das Americas.

Interbrew Chief Executive John Brock will take on the same job at the new company, to be based in Leuven, Belgium, Interbrew's current headquarters.

Interbrew expects 280 million euros of annual cost savings.

Despite initial skepticism, investors have warmed to the deal, pushing Interbrew shares nearly 10 percent higher since the deal was first announced in March.

AmBev's preferred shares have slumped about 18 percent since early March but its common, or voting stock, has gained some 66 percent over the period.

Interbrew has said it would consider listing the new company on New York Stock Exchange in the next two years.

With the next six months, Interbrew will make a tender offer for AmBev's remaining voting shares at a cost of up to 1.4 billion euros.

Brazilian regulators recently rejected a request by the country's largest pension fund to determine whether the deal would hurt minority shareholders.

- Arik

Posted by Arik Johnson at September 5, 2004 01:03 PM | TrackBack