Saturday’s ad is for Stella Artois, from 2006. This is not a particularly old ad, but it’s meant to look older, or at least more classic, than it is. I really like the visuals of it, if not the beer itself. But then I love flags and am an amateur vexillologist. I visited the Stella Artois brewery in Leuven last year, with a large group of beer judges, and it holds the record for “worst beer tour” ever. Not the longest (that was a couple of days later) but they kept us sweating in hot, confined area, restricted our movement like they were afraid we were spies and generally treated us like children. Oh, and I later found out they thought we were rude, which is hilarious. I had also hoped that at the source, I’d finally understand what all the fuss is abut the beer. Nope, it still didn’t taste very good, at least to me.
According to a new report in Business Insider, the new entity combining Anheuser-Busch InBev and SABMiller will control six out of the ten best-selling beers in America, and it would have been eight, except the deal currently stipulates that “Molson Coors will take Miller off of SABMiller’s hands.” But I especially like the handy flowchart they created to show the evolution of the various companies that will come together to become SABInBev, or whatever they end up calling the new beer behemoth. Sadly, it looks like SABMiller, or what’s left of it, will simply be absorbed into ABI.
Niall, at the Missing Drink, has an interesting post about the possible buyout of SABMiller by Anheuser-Busch InBev. Entitled A Brief History of Big Beer, he provides some analysis of the deal, but I especially like his helpful chart of the M&A of all the major players, which is below. It’s great to see them laid out to encapsulate the history of those big deals, especially in recent decades.
Here’s his clever take on what the newly minted entity might be called, and what a new alphabet soup logo might look like. It was genius taking the “AB” from ABI and putting it with the “S” from SAB. It certainly will be interesting to see what new name (and logo) does emerge if the deal ultimately goes through.
While most of us were sleeping, it appears SABMiller and Anheuser-Busch InBev were quite busy, and announced this morning SABMiller and Anheuser-Busch InBev [Reach] Agreement in principle and extension of PUSU. The New York Times has an analysis of the deal, or you can read the entire Press Release from SABMiller:
LONDON–The Boards of AB InBev (Euronext: ABI) (NYSE: BUD) and SABMiller (LSE: SAB) (JSE: SAB) announce that they have reached agreement in principle on the key terms of a possible recommended offer to be made by AB InBev for the entire issued and to be issued share capital of SABMiller (the “Possible Offer”).
Terms of Possible Offer
Under the terms of the Possible Offer, SABMiller shareholders would be entitled to receive GBP 44.00 per share in cash, with a partial share alternative (“PSA”) available for approximately 41% of the SABMiller shares.
The all-cash offer represents a premium of approximately 50% to SABMiller’s closing share price of GBP 29.34 on 14 September 2015 (being the last business day prior to renewed speculation of an approach from AB InBev).
The PSA consists of 0.483969 unlisted shares and GBP 3.7788 in cash for each SABMiller share, equivalent to a value of GBP 39.03 per SABMiller share on 12 October 2015, representing a premium of approximately 33% to the closing SABMiller share price of GBP 29.34 as of 14 September 2015. Further details of the PSA are set out below.
In addition, under the Possible Offer, SABMiller shareholders would be entitled to any dividends declared or paid by SABMiller in the ordinary course in respect of any completed six-month period ended 30 September or 31 March prior to completion of the possible transaction, which shall not exceed USD 0.2825 per share for the period ended 30 September 2015 and a further USD 0.9375 per share for the period ended 31 March 2016 (totalling USD 1.22 per share) and shall not exceed an amount to be agreed between AB InBev and SABMiller in respect of periods thereafter (which shall be disclosed in any announcement of a firm intention to make an offer).
The Board of SABMiller has indicated to AB InBev that it would be prepared unanimously to recommend the all-cash offer of GBP 44.00 per SABMiller share to SABMiller shareholders, subject to their fiduciary duties and satisfactory resolution of the other terms and conditions of the Possible Offer.
Antitrust and reverse break fee
In connection with the Possible Offer, AB InBev would agree to a “best efforts” commitment to obtain any regulatory clearances required to proceed to closing of the transaction. In addition, AB InBev would agree to a reverse break fee of USD 3 billion payable to SABMiller in the event that the transaction fails to close as a result of the failure to obtain regulatory clearances or the approval of AB InBev shareholders.
The announcement of a formal transaction would be subject to the following matters:
- a) unanimous recommendation by the Board of SABMiller in respect of the all-cash offer, and the execution of irrevocable undertakings to vote in favour of the transaction from members of the SABMiller Board, in a form acceptable to AB InBev;
- b) the execution of irrevocable undertakings to vote in favour of the transaction and to elect for the PSA from SABMiller’s two major shareholders, Altria Group, Inc. and BevCo Ltd., in each case in respect of all of their shareholding and in a form acceptable to AB InBev and SABMiller;
- c) the execution of irrevocable undertakings to vote in favour of the transaction from AB InBev’s largest shareholders, the Stichting Anheuser-Busch InBev, EPS Participations SaRL and BRC SaRL in a form acceptable to AB InBev and SABMiller;
- d) satisfactory completion of customary due diligence; and
- e) final approval by the Board of AB InBev.
The Board of AB InBev fully supports the terms of this Possible Offer and expects (subject to the matters above) to give its formal approval immediately prior to announcement.
AB InBev reserves the right to waive in whole or in part any of the pre-conditions to making an offer set out in this announcement, other than c) above which will not be waived.
The conditions of the transaction will be customary for a combination of this nature, and will include approval by both companies’ shareholders and receipt of antitrust and regulatory approvals.
In view of the timetable for obtaining some of these approvals, AB InBev envisages proceeding by way of a pre-conditional scheme of arrangement in accordance with the Code.
The cash consideration under the transaction would be financed through a combination of AB InBev’s internal financial resources and new third party debt.
Further details of the PSA
The PSA comprises up to 326 million shares, which will be available for approximately 41% of the SABMiller shares. These shares would take the form of a separate class of AB InBev shares (the “Restricted Shares”), with the following characteristics:
- Unlisted and not admitted to trading on any stock exchange;
- Subject to a five-year lock-up from closing;
- Convertible into AB InBev ordinary shares on a one for one basis after the end of that five year period;
- Ranking equally with AB InBev ordinary shares with regards to dividends and voting rights; and
- Director nomination rights.
SABMiller shareholders who elect for the partial share alternative will receive 0.483969 Restricted Shares and GBP 3.7788 in cash for each SABMiller share.
Extension of the PUSU deadline
In accordance with Rule 2.6(a) of the Code, AB InBev was required, by not later than 5.00 pm on 14 October 2015, to either announce a firm intention to make an offer for SABMiller in accordance with Rule 2.7 of the Code or announce that it does not intend to make an offer for SABMiller, in which case the announcement will be treated as a statement to which Rule 2.8 of the Code applies.
In accordance with Rule 2.6(c) of the Code, the Board of SABMiller has requested that the Panel on Takeovers and Mergers (the “Panel”) extends the relevant deadline, as referred to above, to enable the parties to continue their talks regarding the Possible Offer. In the light of this request, an extension has been granted by the Panel and AB InBev must, by not later than 5.00 pm on 28 October 2015, either announce a firm intention to make an offer for SABMiller in accordance with Rule 2.7 of the Code or announce that it does not intend to make an offer for SABMiller, in which case the announcement will be treated as a statement to which Rule 2.8 of the Code applies. This deadline will only be extended with the consent of the Panel in accordance with Rule 2.6(c) of the Code.
AB InBev reserves the following rights:
- a) to introduce other forms of consideration and/or to vary the composition of consideration;
- b) to implement the transaction through or together with a subsidiary of AB InBev or NewCo or a company which will become a subsidiary of AB InBev or NewCo;
- c) to make an offer (including the all-cash offer and PSA) for SABMiller at any time on less favourable terms:
(i) with the agreement or recommendation of the Board of SABMiller;
(ii) if a third party announces a firm intention to make an offer for SABMiller on less favourable terms; or
(iii) following the announcement by SABMiller of a whitewash transaction pursuant to the Code; and
- d) to reduce its offer (including the all-cash offer and PSA) by the amount of any dividend that is announced, declared, made or paid by SABMiller prior to completion, save for ordinary course dividends declared or paid prior to completion, which shall not exceed USD 0.2825 per share for the period ended 30 September 2015 and a further USD 0.9375 per share for the period ended 31 March 2016 (totalling USD 1.22 per share) and shall not exceed an amount to be agreed between AB InBev and SABMiller in respect of periods thereafter (which shall be disclosed in any announcement of a firm intention to make an offer).
The announcement does not constitute an offer or impose any obligation on AB InBev to make an offer, nor does it evidence a firm intention to make an offer within the meaning of the Code. There can be no certainty that a formal offer will be made.
A further announcement will be made when appropriate.
Today in 2010, US Patent 7810679 B2 was issued, an invention of Albert W. Wauters, Ian Anderson, and Edward P. Duffy, assigned to Anheuser-Busch Inbev S.A., for their “Beer Dispensing System with Gas Pressure Reservoir.” Here’s the Abstract:
A home beer dispensing apparatus has a keg having a self-contained bag filled with a beer and a pressure system. The pressure system creates a pressurized air space between the keg inner walls and the bag to assist in the dispensing of the beer. The pressure system has a keg one-way air valve mounted to a top wall of the keg to permit entry of pressurized air into the keg. The pressure system has a pressure reservoir mounted in the dispensing apparatus outside the keg and in fluid flow communication with the keg one-way valve. The reservoir stores a charge of pressurized air and supplies at least a portion of this charge to the keg through the keg air valve when the dispensing apparatus is operated to dispense the beer. The reservoir provides a reserved charge of pressurized gas that is on hand to reduce dampening pressure fluctuations during beer dispensing which can result in beer frothing, especially during the early stages of beer dispensing when the air head space in the keg is small. Further, the apparatus may also have a pressure sensing system adapted to measure time rate of pressure change in the keg. The apparatus has a signaling device responsive to the time rate of pressure change in the keg to produce a signal related to volume of beer remaining in the bag. Preferably, the signal is displayed visually on the dispensing apparatus.
From the press release:
Labatt Breweries of Canada today announced that it has purchased Mill Street Brewery, an award-winning craft brewer based in Toronto. The deal will allow Mill Street to deepen its traction with consumers in the fast growing craft beer segment, where it has an extraordinary variety of unique beers, as well as brew pubs in both Toronto and Ottawa. To help achieve this, Labatt will immediately invest $10 million in Mill Street’s Toronto brewery, which includes a state-of-the-art brewhouse and packaging capabilities.
“Mill Street has continually distinguished itself with its energy and success in innovation, and powerful commitment to great-tasting quality beer,” said Labatt president Jan Craps. “Our partnership and investment will accelerate its growth in one of the most dynamic beer segments, while fully preserving Mill Street’s creative character and pioneering spirit.”
“With the success of Mill Street has come the challenge of serving a growing demand for our brands,” said Irvine Weitzman, Mill Street CEO, who will continue with Mill Street along with co-founder Steve Abrams and famed brewmaster Joel Manning. “Our partnership with Labatt is a natural evolution in our growth that will allow more Canadians to enjoy our beer and secure the legacy of our brands by allowing us to remain focused on the authentic characteristics that have made Mill Street what it is today.”
Founded in Toronto’s Distillery District in 2002, Mill Street is an award-winning craft brewery and the largest producer of certified organic beer in Canada. It has won numerous beer quality awards including the Canadian Brewery of the Year Award in three consecutive years. Core brands include Ontario’s first organic beer, Mill Street Original Organic Lager, along with 100th Meridian, Tankhouse Ale, and Cobblestone Stout. The brewer is also renowned for permanent specialties including a strong golden ale Betelgeuse, an Irish-style red ale Bob’s Bearded Red and nitrogen-charged Vanilla Porter, as well as for several small-batch specialty beers.
“Throughout our history, our dedication to our craft and our passion for pushing the envelope have allowed Mill Street to make waves in Canada’s craft beer segment,” said Abrams. “We are excited about the prospect of working with Labatt to build even further on our successes and sharing our brands with more beer lovers across Canada.”
Mill Street brands will continue to be brewed under the expertise of brewmaster Joel Manning.
“This investment in a state-of-the-art brewhouse that Mill Street will run on a stand-alone basis positions us to reach the very top of our craft,” added Manning. “We couldn’t be more pleased by this fantastic opportunity to further entrench our reputation for innovation and quality, and bring more great brands to more consumers.”
From left to right: Irvine Weitzman, Mill Street CEO, Jan Craps, President of Labatt, Joel Manning, Brewmaster at Mill Street, and Steve Abrams, Co-Founder of Mill Street. (CNW Group/Labatt Breweries of Canada)
SABMiller released a statement this morning rejecting the latest takeover offer from Anheuser-Busch InBev. You may, or may not, be able to read the statements released by SABMiller on their website, and there are some fairly scary disclaimers including language that, depending on your jurisdiction, claims that the publicly available information may not be legal to read, and in such case advise you to “exit this web page.” Which while I’m sure is required by some law, probably UK law, also feels fairly ridiculous. At any rate, quite a few news outlets, such as the Wall Street Journal, Reuters and the New York Times are all reporting on it, so it must be okay for the likes of me.
The gist of it is the SABMiller board unanimously rejected ABI’s latest takeover offer, for the primary reason that they believe ABI’s offer “substantially” undervalues their company (currently the offer values SABMiller at $104 billion), among a few other technical reasons having to do with the timing, regulatory issues and others. The current offer is for roughly £65.14 billion, which is $99.76 billion dollars.
The Wall Street Journal helpfully created a graphic showing the recent history of the potential deal as it’s been unfolding.
There’s little doubt this is not the end of it, but there will continue to be a back and forth as this high-stakes game unfolds. And it really is a game, sad to say. Apparently negotiations have been tense, which really should not come as a shock to anybody, yet you see statements like this. “AB InBev is disappointed that the board of SABMiller has rejected both of these prior approaches without any meaningful engagement.” The absurdity of that reveals the gamesmanship involved, as it plays out in the media. It’s going to be an interesting few weeks.
This morning, Anheuser-Busch InBev announced they were acquiring Golden Road Brewing, located in Los Angeles. The Wall Street Journal confirmed “Terms of the deal weren’t disclosed,” and that the “acquisition is expected to close in the fourth quarter.”
From the press release:
“The energy and passion of the beer community is what drew me into this industry and with Golden Road we wanted to help develop the craft beer market in L.A.,” said Meg Gill, president and co-founder at Golden Road Brewing. “Our team worked hard to build Golden Road from the ground up and we are proud of the growth we’ve achieved in such a short time. California is an exciting and competitive market for beer and I see endless opportunities in partnering with Anheuser-Busch and their incredible distribution network to bring our beers to more people.”
As the largest craft brewery in Los Angeles County, Golden Road expects to sell approximately 45,000 barrels of beer in 2015 and can be found in more than 4,000 retail locations. With a brewery focused on draft and can production, a pub in Los Angeles and a new tasting room downtown. Additionally a new tasting room, opening in 2015, second production brewery and pub in Anaheim will be operational by the fourth quarter of 2016. Its core brands – Point the Way IPA, Wolf Among Weeds IPA, Golden Road Hefeweizen and 329 Days of Sun Lager – represent 95 percent of volume. Along with the core beers, Golden Road brewers are constantly experimenting with the freshest ingredients through a collection of rotating, seasonal and limited-edition brews, most notably the Custom IPA Series, a line-up of diverse, hop-forward IPAs.
“Golden Road’s commitment to making great beer, their pioneering spirit and the passionate beer culture built within the company is what appealed to us,” said Andy Goeler, CEO, Craft, Anheuser-Busch. “Their focus on giving back to the community and impact on the Los Angeles craft market in four short years makes Golden Road a strong addition to our craft portfolio.”
Golden Road Brewing will join Goose Island Beer Company, Blue Point Brewing, 10 Barrel Brewing and Elysian Brewing as part of Anheuser-Busch’s High End Business Unit’s portfolio. Anheuser-Busch’s partnership with Golden Road Brewing is expected to close by the end of the fourth quarter of 2015. Terms of the agreement were not disclosed.
Meg and me at the opening Gala for SF Beer Week in 2011.
And here, co-founder Meg Gill talks about the deal in a video.
Cervejaria Colorado was one of Brazil’s first small breweries when it opened in 1995. I met founder Marcello Carneiro in Argentina when I was there for beer judging in 2011. He’s one of the most fun-loving people I’ve ever met and I’ve since seen him in Brazil and also stateside a few times. He announced earlier today on Facebook that AmBev would be acquiring his brewery. Here’s the Google translation of the announcement:
Dear friends of the bear, we are very happy to formalize you that now the Colorado it becomes part of the group Ambev, along the breweries beer! In 1995, our founder, Marcelo Carneiro, started his journey in the country and put the breweries Colorado on the international market, solidifying a company that today bill around $18 million per year. 20 years ago we work with dignity and fight for the cause brewery, we gain strength and tread a path of large awards, authenticity and it will now be even better! We will continue to develop Brazilian genuinely revenue, our DNA. The Union of the brands will make it possible to increase the capacity of distribution of Colorado and, of course, to our dear Marcelo to devote even more to research of ingredients. Our commitment to the lovers of good beer is still strong and the dream that unites the two pubs is the recovery of the Brazilian beer, with ingredients Brazilians and produced for consumers from north to south of the country. Unite is to make this dream a reality, the dream of the Brazilian school of beer! A toast and hug from bear.
AmBev, you may recall, is the Companhia de Bebidas das Américas, a Brazilian brewing company, and the largest in Latin America and 5th worldwide. It was established by a merger of Brahma and Antarctica in 1999. After more business dealings, mergers and acquisitions, today is owned by Anheuser-Busch InBev. AmBev makes Antarctica, Brahma, Bohemia, and Skol, and in addition has a controlling interest in the popular Argentine brand Quilmes.
AmBev also released a statement, which I’ve used Google Translate to make more understandable as my Portuguese is worthless:
COLORADO NOW IS THE TIME OF THE BREWERY BOHEMIA
Breweries unite the passion for beer and the search for innovation
The dream of creating a Brazilian school of beer, based on the valuation of culture and national ingredients, joined our Brewery Bohemia Brewery and Colorado. The mark of São Paulo is now part of our team, bringing their tradition, quality, passion and daring.
“I am very excited about the opportunity to achieve my dream with Cervejaria Bohemia. When I founded the Colorado 20 years ago, always wanted to give a national touch to recipes and create a Brazilian school of beer, as there is the German and Belgian. I know that together we will make it happen, “says Marcelo Cerneiro, founder of Colorado.
Wakswaser Daniel, director of marketing for Cervejaria Bohemia, also celebrates the partnership: “It’s a time of celebration for the Brazilian culture. Our union allows further spread the knowledge brewing across the country. Consumers will have more choices, varied beers, unusual income and undisputed quality. ”
The Colorado follows with manufacturing in Ribeirão Preto, São Paulo. All labels will be maintained and the union with Bohemia Brewery will bring innovation to the portfolio. With the alliance, the distribution of power increases, enabling the brand to bring more beer enthusiasts throughout Brazil.
So it appears that the acquisition will merge Colorado with AmBev’s premium division headed by Cervejaria Bohemia, just as Wäls did in February, when AmBev bought them, as well. Also, in May, they acquired the Bogotá Beer Co., which is/was Colombia’s largest craft brewer.” So it appears there’s some long term plan for Latin America, just as we’re seeing here in the United States, too.
Marcelo’s also announced what his role will be going forward. “My job is international consultant, for a minimum of five years. My task will be to open new roads for Colorado, talk to business partners, represent the brand that I fought for 20 years. My fight has always been and will continue to facilitate the consolidation of a typically Brazilian brewing school, and it will never be abandoned.”