AB InBev and SABMiller Amazing


SABMiller, the world's second-largest brewer by volume, may be the most suitable takeover target for its rival and world's No. 1 brewer Anheuser-Busch InBev, Credit Suisse analysts said today.

Bloomberg News reports that A-B InBev could buy SABMiller after it has cut debt incurred from buying St. Louis-based Anheuser-Busch in 2008, the analysts wrote in a note. (And A-B InBev is doing well on the debt front, paying it off ahead of schedule.)

SABMiller could be valued at $71 billion, making that $56 billion blockbuster acquisition of A-B less than three years ago suddenly seem small.

The analysts, including Anthony Bucalo (a respected stock analyst and one-time InBev employee), noted that buying SABMiller would give A-B InBev greater exposure to emerging markets such as Latin American and Africa and would counter "the continuing ills of the U.S. domestic beer market."

"We appreciate ABI for its strong management and structural strength in the world's top profit pools and SABMiller for its solid organic growth and advantaged competitive positions in key emerging markets," Credit Suisse said. "Over time, we believe both these companies' strategic interests will continue to align and this would be of benefit to both sets of shareholders."

SABMiller gets 69 percent of its revenue from regions outside North America and Europe, Bloomberg noted. AB InBev gets 54 percent of its revenue from developed markets including the U.S. and western Europe.

One potential sticking point: The United States.

The combination of the makers of Budweiser and Miller (plus Coors, through the MillerCoors joint venture) would create a single brewery controlling nearly 80 percent of the U.S. market.

Regulators likely would require any merger between A-B InBev and SABMiller to divest of some U.S. beer brands.