Local distributor says merger between beer giants unlikely

The president of one local distributor calls the proposed purchase of SABMiller by Anheuser-Busch InBev a "six-pack conversation."

But Billy Bess, 35-year president of Bluff City Beer Co., said he's not worried about what would happen should SABMiller accept AB InBev's offer.

"Because the United States has antitrust laws, it is really not going to affect us very much at all," Bess said.

"You see, currently, Anheuser-Busch has about a 48 [percent] share of the American beer market. That leaves MillerCoors with 30, and if you combine those two together, that would give them a 78 percent market share. And there's no way that the Department of Justice is going to allow that to happen."

Bluff City Beer Co. distributes craft, microbrew, imported and domestic beers, including Miller products.

Anheuser-Busch InBev, the world's biggest brewing company, announced Wednesday it wants to buy SABMiller, the second-largest brewer.

The deal would create a multinational company valued around $275 billion, with annual sales of $73.3 billion -- more than three times its closest rival, Heineken.

Bess said the transaction would be complicated.

"MillerCoors has a joint venture here in the United States, and that's between the parent company of Coors, Molson Coors ... and on the flip side of that, you've got SABMiller, which is headquartered in London, England," Bess said. A 2002 deal created SABMiller when the old Miller Brewing Co. was purchased from Philip Morris, now part of the Altria Group, Bess said.

Miller was sold for 64 percent cash and 36 percent stock, Bess said. Nine percent of that stock has been sold back to SABMiller, leaving Altria with 27 percent.

Molson Coors entered into a joint venture with SABMiller in 2007 with a new board of directors, Bess said.

"So this is going to be ... very complex," he said. "They are saying it's going to take a 30 percent premium ... so it's going to take $51 or $52 a share just to get the deal done."

AB InBev's brands include Budweiser, Bud Light, Corona, Beck's and Stella Artois. The company makes almost half the beer sold in the U.S. According to Euromonitor, AB InBev has a 21 percent share of the global beer market.

The company's latest annual revenue was $47.06 billion.

AB InBev traces its lineage to a brewery in Belgium in 1366. In 2004, Belgian Interbrew combined with Brazilian Ambev to make InBev, and in 2008, InBev bought U.S.-based Anheuser Busch.

The company later acquired Mexico's Grupo Modelo but sold Modelo's U.S. business.

SABMiller, whose brands include Miller, Peroni, Milwaukee's Best and Grolsch, has an almost 10 percent market share.

The company's last reported annual revenue was $26.29 billion.

SABMiller sells beers including Miller Lite, Coors Light and Blue Moon in the U.S. and Puerto Rico through a joint venture with Molson Coors.

Bess points to Miller's South Africa connections as one reason AB InBev is interested in acquiring the company.

"AB wants the African market, where SAB -- ­South African Breweries -- is very strong. They've got a 49 share, and that's still an emerging market." Bess said. "At the same time, for SABMiller, it's good for them to go into South America, where they're not so strong" but AB InBev is.

Still, a lot of pieces have to fall into place before the proposal becomes reality.

"And they've got to get it done quickly," Bess said. He explained since both companies are global, the deal has to be done by October so the currencies are strong.

If either the Belgian franc or the British pound falters or falls, or if bond prices spike, Bess said, "then it's going to cost more to do the deal. So that's why they want to try to get this done by October."

He said if the deal would go through, he doesn't expect a large affect on consumers, at least for the next year.

"Plans have already been made for 2016. If anything's going to be done, it'll be in 2017."

But, Bess warned, "if this deal goes through, then SABMiller/InBev will have one-third of the global beer market. One-third. And when you've got all those eggs in one basket, who controls the pricing?"

The Associated Press contributed some information for this report.

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