AB InBev Will Report Its Q2 Results As SABMiller Pauses Integration Activity

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Anheuser-Busch InBev (NYSE:BUD) is scheduled to announce its Q2 and half-yearly results on July 29, and although all eyes and ears will be on the update on the SABMiller acquisition, it will be interesting to see how the world’s largest brewer has been faring in crucial markets such as the U.S., Brazil, Mexico, and China.

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The third largest acquisition in history beckons regulatory approval, and AB InBev has secured that in Australia, Europe, South Africa, and now the U.S. AB InBev is now awaiting China’s regulatory approval. The coming together of two of the biggest names in beer will create a behemoth that will account for ~28% of the global beer market. The deal, however, has met with a pause, with SABMiller taking time to consult with its shareholders over whether the new revised offer by AB InBev is acceptable. The value of the offer has fallen, since the pound sterling has taken a hit against the U.S. dollar and the euro. The pound sterling is down ~10% against the euro and ~12% against the dollar since right before the announcement of the Brexit vote on June 23. AB InBev lifted its cash offer to £45 a share, from £44 a share, to appease shareholders of SABMiller, which has halted, for now, integration with AB InBev, and is assessing whether the shareholders want to go ahead with the new offer.

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AB InBev has looked to ensure the closing of this deal by the second half of 2016, and has been working with SABMiller on integrating technology, finance, procurement, and certain supply-chain functions. The pause doesn’t necessarily mean that the deal might not come through or that SABMiller will oppose the new offer, but the uncertainty that has been brought on by the sudden fluctuation in the pound, and the events following that, have sent AB InBev’s ADR’s down 3.8% just before the announcement of the half-yearly results.

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Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
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