Sarinya’s Discussion - Week 4: MEGA-MERGER? HOW ABOUT NO?
Is it a bad idea for the world beer marketplace?
In 2009, MillerCoors was a joint venture between SABMiller and Molson Coors Brewing Company.
■ The joint venture has the responsibility of selling brands such as Miller Lite, Miller High Life, Miller Genuine Draft, Coors, Coors Light, Molson Canadian, Crispin Hard Cider Company, and Blue Moon in the United States, with the purpose of combining all of their US brewing operations to better compete against Anheuser-Busch InBev (AB InBev)
■ SABMiller and Molson Coors each have a 50% interest in the joint venture, and have five representatives each on its board of directors. Based on the value of the assets, SABMiller will have a 58% economic
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This is about the most acquisitive brewer in the history of the world getting the biggest checkbook ever.
This brewers’ mega-deal is fresh evidence that big is not necessarily good
The main achievement of the AB InBev and SAB Miller merger – apart from being the third-largest merger ever recorded – is to cut costs and create more than 5,500 jobs lost.
Distributors in particular should save money since they now will be able to deal with one company instead of two.
Therefore, a merger between AB InBev and SABMiller would create a dominant company of the entire world’s supply of beer. This is not just a bad idea for the American beer industry, it is a terrible idea for the world beer marketplace, because the deal will create a single brewer which sells 30 percent of the entire world’s supply of beer – powerful enough to warp the marketplace.
The merger most certainly will be closely reviewed by the U.S. Justice Department and the Federal Trade Commission since it combines the U.S. operations of the second and third largest U.S. brewers, which maintains that a merger will be deemed illegal if there will be a reasonable probability of a substantial lessening of competition in a relevant market or if there is a tendency to create a