SABMiller Sells Stake in Snow Beer Brewers

Two bottles of Snow beer.

Image: Snow Beer, the world’s top-selling beer | QZ

China Resources Beer has agreed to buy out SABMiller’s stake in the maker of Snow, one of the world’s top-selling beers. Anheuser-Busch reports that sale to China Resources Beer will ease regulators’ concerns about a highly expensive merger with SABMiller worth about $1.6 billion.

The merger, advised by Lazard and Merrill Lynch, would give China Resources Beer complete ownership of the Snow brand, which sells more than similar beers like Bud Light and Budweiser.

The merger had been hotly anticipated given that such a significant change of hands, to the tune of 49%, is likely to bring new changes and new ideas forward.

But while the merger wasn’t unexpected, its finalization came down to cost. Analysts had priced the merger at the $5 billion mark.

“We think that the 49 percent stake could have attracted a higher price if offered to other brewers on the open market, but assume that ABI’s negotiations with the Chinese regulators ended up precluding this course of action,” said Canaccord Genuity analysts.

This particular deal comes on the heels of other similar transactions aimed at earning approval for SABMiller’s $100 billion buyout of Anheuser-Busch InBev, the largest transaction of its kind in the history of consumer goods. Last November, SABMiller sold its 59 percent stake in MillerCoors to Molson Coors Brewing for $12 billion. Then, in February, Japan’s Asahi Group Holdings moved forward with an offer to buy beer brands Grolsch and Peroni in addition to some European operations of SABMiller for the equivalent of about $2.8 billion.

In 2014, China Resources Beer accounted for 23.3 percent of the Chinese beer market; Tsingtao Brewery, likewise popular, accounted for 18.4 percent in the same year. The corporation plans to finance its acquisition of SABMiller’s Snow stake via a combination of different options, including debt, equity financing, and cash.

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