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Instant Analysis: Justice Department OKs AB InBev/SAB Miller Merger

By Eric Volkman – Jul 22, 2016 at 2:10PM

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The American regulator effectively signs off on the monster deal, with a few stipulations.

What happened?

A megamerger in the brewery industry has received the U.S. antitrust regulator's approval, with conditions. The Justice Department signed off on the estimated $108 billion takeover of SABMiller by Anheuser-Busch InBev (BUD -1.49%). The news was announced Wednesday

Image source: Anheuser-Busch InBev 

In addition to formalizing a previously agreed upon stipulation that the company divest the entire U.S. portfolio of SABMiller, the Department of Justice is prohibiting the expanded AB InBev "from instituting or continuing practices and programs that limit the ability and incentives of independent beer distributors to sell and promote the beers of [AB InBev's] rivals, including high-end craft and import beers."

Additionally, any AB InBev attempts to buy beer distributors or brewers in the U.S. will be subject to review by the Department of Justice. The merger still faces regulatory scrutiny in China.

Does it matter?

The absorption of SAB Miller is going to have a huge impact on AB InBev. But this deal has been (sorry) brewing for quite some time, and the company agreed to the SABMiller U.S. divestment last year. So there wasn't much surprise in the Department of Justice's announcement.

The new stipulations likely won't affect the beefed-up AB InBev too much thanks to its massive size, although the company might find it trickier to acquire choice assets going forward.

Meanwhile, investors in Molson Coors (TAP -1.93%) can also look forward to their company expanding its footprint.

As per the requirement for AB InBev to shed SABMiller assets once the merger closes, Molson Coors is to become the sole owner of the MillerCoors joint venture. It is to pay around $12 billion for SABMiller's 58% stake. This will give Molson Coors the right to brew and sell bar staples such as Coors Light, Miller Genuine Draft, and Blue Moon in the U.S. It will also control the U.S. rights to several foreign brands like Peroni.

Eric Volkman has no position in any stocks mentioned. The Motley Fool recommends Anheuser-Busch InBev. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Stocks Mentioned

Anheuser-Busch InBev/NV Stock Quote
Anheuser-Busch InBev/NV
BUD
$59.45 (-1.49%) $0.90
Molson Coors Beverage Stock Quote
Molson Coors Beverage
TAP
$54.50 (-1.93%) $-1.07

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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