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DOJ extends review of InBev’s planned takeover of Anheuser-Busch

Global beer conglomerate InBev, S.A. has announced that it received a request for additional information, or “Second Request,” from the United States Department of Justice (DOJ) relating to its planned acquisition of Anheuser-Busch, Inc. InBev, which had recently gained Anheuser-Busch’s approval of its US$52 billion bid for the company, has pledged to cooperate fully with the DOJ’s review. Despite the Second Request, InBev expects to close the transaction before year’s end.

Combined, InBev and Anheuser-Busch would be the world’s single largest brewer ahead of SABMiller plc. In the United States, Anheuser-Busch controls approximately 50 percent of the beer market, through its Budweiser and Bud Light brands. Direct competition between the brewers is limited as InBev mostly markets more expensive imported beers such as Stella Artois and Beck’s. The companies hope that the combination will improve marketing of both InBev’s brands in the United States and Anheuser-Busch’s brands abroad, and create other cost-saving synergies. Such synergies are likely to be important to the DOJ, which cited cost-saving efficiencies in approving the joint venture between the US operations of SABMiller and Molson Coors Brewing Company in June of this year.

Even if cleared by the DOJ, the combination of InBev and Anheuser-Busch faces additional hurdles. Anheuser-Busch shareholders have yet to approve the transaction, which will yield them US$70 per share of stock. The company has called a special shareholders meeting for this purpose to be held on November 12. In addition, a group of US beer drinkers filed a lawsuit in September in US District Court in St. Louis, Missouri seeking to enjoin the transaction as anticompetitive. Anheuser-Busch responded in public statements that the lawsuit lacks merit and the company will vigorously defend the transaction. Finally, InBev recently announced that it postponed a rights issue valued at US$9.8 billion it had hoped to use to finance the acquisition.