The Justice Dept. is taking a closer look at Anheuser-Busch InBev's (NYSE:BUD) acquisition of Craft Brew Alliance (NASDAQ:BREW), filing a second request demand for information under provisions of the Hart-Scott-Rodino Antitrust Improvement Act (HSR).
All mergers and acquisitions are reviewed by the Federal Trade Commission for their impact upon competition and the agency issues a request for more information when it finds areas of concern. While most mergers are approved on the initial review, second requests are not uncommon, though it often means the regulatory agency requires the companies to take some action. Divesting additional assets is a common solution to the request.
Crafting a broader beer portfolio
Amid changing consumer drinking preferences, Anheuser-Busch agreed on Nov. 11 to acquire the 68% of Craft Brew Alliance it didn't already own. The megabrewer will pay $320 million for the craft brewer's popular Kona Brewing brand, as well as several regional beers, including Appalachian Mountain Brewery, Cisco Brewers, and Wynwood Brewing.
The path to acquisition has been convoluted, as Anheuser-Busch initially chose to pay a $20 million fee to Craft Brew after it declined to make a "qualifying offer" of $24.50 per share in August, but returned less than three months later offering to pay $16.50 per share.
Both brewers submitted HSR reports to the FTC on Dec. 6, but Anheuser-Busch withdrew its forms and resubmitted them on Jan. 6. The regulatory agency then notified the brewers on Feb. 5 it wanted additional information about the merger.
Companies are not allowed to close their deal until the waiting period outlined in the HSR Act has passed, and the second request extends the deadline by an additional 30 days.