The hot news item (here) is the $106 billion agreement for AB InBev NV [a Belgian firm] to acquire SABMiller Plc [a UK firm]. The proposed venture will control 1/3rd of the global beer market and 50% of global beer profits. This is the latest in a cumulative $90 billion in acquisitions following the buyout of a group of Brazilian investors of Brahma beer.
The final form of the firm will be a function of antitrust rulings in the US [surely MillerCoors and Budweiser won’t be allowed to merge] and in China [Snow Beer, partially owned by SABMiller, is by far the largest firm, but AB InBev has 14 breweries there, too].
A big question: why (if at all) can a merger of this sort add value? At first glance, all it does is rearrange who owns which brand. Will this allow higher prices? Are there breweries that are poorly utilized so that this can produce operating efficiencies? or large sales forces that overlap and can be pared? But unless they kill brands, there are no savings on advertising. So no gains to beer operations, no gains to shareholders, only one group of execs grabbing the bonuses of another. For the lucky few, that is a big chunk of income.
Now don’t forget that 1/3rd figure. Here’s an infographic from an Oct 12, 2015 Bloomberg article on markets where neither is dominant: