Americans love their entertainment. Relaxation, parties, vacations, and a little drunkenness goes a long way in appeasing its citizens. AB InBev, an international brewery, knows this, and is making strides to deliver beer to the world. In one of the biggest corporate takeovers in the modern age, InBev purchased SABMiller, another brewery giant, for an unheard of $100 billion. But the deal was a little sour to start. Investors weren’t at all happy with the company’s plans to finance most of the purchase using corporate bonds. As the expert Ultius freelance writer points out in the following sample business research paper, this risky endeavor sent many investors scrambling.
The deal: InBev buys Miller for $100 Billion
Marking the biggest beer making deal of the century, Anheuser-Busch InBev (ABInBev) announced they would buy SABMiller, an English brewer, for $100 billion in 2015 (Riley, “Anheuser-Busch InBev agrees to buy SABMiller in biggest beer deal ever”). This deal created the world’s largest breweries, owning nine of the world’s top 20 beers by volume (Riley, “Anheuser-Busch InBev agrees to buy SABMiller in biggest beer deal ever”). AB InBev told reporters at the New York Times:
The deal, reached after months of negotiations, would create a beer industry giant with annual revenue of about $64 billion and would give Anheuser-Busch InBev, already the world’s largest brewer, a substantial operation in Africa, where it has little presence, and greater dominance in Latin America. (Bray, “Anheuser-Busch InBev Completes Agreement for SABMiller”)
AB InBev Brand Portfolio Source: AB InBev
See the beverave giant’s brands and their taglines.
|Budweiser||“The Great American Lager”|
|Corona||“Stands for Mexican pride all over the world”|
|Stella Artois||“Worldwide icon of supreme quality and worth”|
|Beck’s||“The world’s number 1 German beer”|
|Leffe||“Making the extraordinary just perfect”|
|Hoegaarden||“An authentic Belgian wheat beer”|
AB InBev offered to sell most of Miller’s stocks for £44 ($67.59USD) per share (Riley, “Anheuser-Busch InBev agrees to buy SABMiller in biggest beer deal ever”). This includes the makers of Miller Lite, Pilsner Urquell, and Peroni (Riley, “Anheuser-Busch InBev agrees to buy SABMiller in biggest beer deal ever”).
In the effort to appease regulators, SABMiller said on Wednesday that it would sell its 59 percent stake in MillerCoors in the United States to its joint venture partner Molson Coors Brewing for about $12 billion. That deal includes the global rights to the Miller brand and would make Molson Coors the second-largest brewer in the United States, behind Anheuser-Busch InBev. (Bray, “Anheuser-Busch InBev Completes Agreement for SABMiller”)
How InBev could afford to buy Miller for $100 billion
AB InBev sold private and public corporate bonds in its own companies to raise funds for the purchase of SAB Miller (Gjorgievska and Eddings, “Billion in Bond Market to Purchase SABMiller”). Anheuser-Busch InBev NV (AB InBev NV) sold $46 billion worth of bonds and investment experts say this could go down in history as the largest corporate offering in history (Gjorgievska and Eddings, “Billion in Bond Market to Purchase SABMiller”). But the deal wasn’t a pleasurable experience for the company’s investors. Major stakeholders desire more return on their investments in order to stick around. Similar to the recent sale of the UFC for $4.2 billion, there was worry about investor and consumer reaction; experts say deals like these are risky and cause serious concern on the stock market.
‘It’s always hard for a market to digest this kind of deal, particularly when you have macro factors affecting investors’ decisions,’ said Jody Lurie, a corporate credit analyst at Janney Montgomery Scott LLC. ‘This is an interesting deal to test the market after the Fed hike and after all the headline risks have come out.’ (Gjorgievska and Eddings, “Billion in Bond Market to Purchase SABMiller”)
InBev issued the notes to finance its takeover of SABMiller Plc (Gjorgievska and Eddings, “Billion in Bond Market to Purchase SABMiller”). It received a record $110 billion in investor orders, allowing it to reduce yields enough to raise about $100 million in potential annual interest costs and proving . (Gjorgievska and Eddings, “Billion in Bond Market to Purchase SABMiller”).
A brief history of Miller: 1855 to their $100 billion sale to InBev
SABMiller is one of America’s top sellers and has become a household name. It all started in 1855 when Frederick Miller brewed his first barrel of beer (BeerHistory.com, “Miller History”). Miller was adamant about “Quality, Uncompromising and Unchanging” (BeerHistory.com, “Miller History”). This became the company’s everlasting slogan, goal, and mission in life – to provide the best beer possible (BeerHistory.com, “Miller History”).
King(s) of Beers: Miller has a long and healthy history (worth $100 Billion)
Miller moved from Germany to Milwaukee to start his career as a brewer. His bought his first brewery for $8,000 (BeerHistory.com, “Miller History”). The Plank-Road Brewery soon became the best brewery in a time when beer sold for about $5 per barrel (BeerHistory.com, “Miller History”). Miller was committed to his employees and opened a boarding house next to the brew house for his unmarried employees (BeerHistory.com, “Miller History”).
The Plank-Road Brewery Source: Beer History
Shortly after he arrived in Milwaukee, Frederick Miller paid $8,000 for the Plank-Road Brewery.
“Because the brewery site was so far from town, Miller opened a boarding house next to the brew house for his unmarried employees. The workers ate their meals in the family house, at the top of the hill overlooking the brewery. Their annual wages ranged from $480 to $1,300, plus meals and lodging.”
From there, Miller’s company grew into a worldwide business featured more brands than any other company in the United States. In 1966, the conglomerate W. R. Grace and Company bought the company from Millers granddaughter, who objected to alcohol and refused to maintain the company, and it passed to Philip Morris a few years later for $130 million. Philip Morris bid more than other national brands, including then multibillion dollar PepsiCo. In 2002, South African Breweries bought Miller from Philip Morris for $3.6 billion worth of stock and $2 billion in debt to prevent the corporation from going bankrupt. The new merger formed SABMiller, the name of the company until InBev recently bought it for $100 billion (BeerHistory.com, “Miller History”). Huge corporate mergers are always a cause for concern as noted in another Ultius sample essay entitled, “Protecting the Consumer and Contemporary Anti-trust Legislation.”
Business research paper: Who is InBev?
Most Americans consider InBev the new kid on the block when it comes to beer. This is not the case. InBev’s long history dates back even further than its new relationship, Miller. The alcohol company has a history dating back more than 600 years (ABInBev, “Our History”). InBev started its historic beverage making in 1366 in Leuven, Belgium (ABInBev, “Our History”). The company started under the name Interbrew (ABInBev, “Our History”). Interbrew lasted until the 1860s in Germany but wanted to expand their company into international waters.
New Relationships: Who is this new beer maker InBev?
The company quickly grew into one of the largest brewers in Europe and North America (ABInBev, “Our History”). It merged with Artois and Piedboef, and in 1995, the company acquired the Labatt Brewing Company in Canada (ABInBev, “Our History”). In 1999 the company saw further potential in Russian markets. These breweries were becoming popular in America and Western Europe. Interbrew entered a joint venture with The Sun group in Russia (ABInBev, “Our History”). This venture grew into the 2000 IPO, and Interbrew entered the world as publicly-owned company trading on the Euronext stock exchange (ABInBev, “Our History”). The company expanded to other markets including Germany and China.
InBev, the company’s name before buying Miller, was born from two companies – Interbrew and lian Companhia de Bebidas das Américas (AmBev)AmBev was a Brazilian brewery focused on selling imported beers and spirits to Central and North America. The two former international brewing companies merged in 2004 to form InBev (ABInBev, “Our History” and The Editors of Encyclopedia Britannica, “InBev”). Notably, the merger and their business plans are often written about by Ultius freelance writers completing sample business plan orders.
Sample business research paper conclusion: InBev Buys Miller for $100 Billion
All these investments paid off quickly for the company. The company’s portfolio of famous brews grew into a worldwide phenomenon. InBev now produces more than 200 popular global brands (ABInBev, “Our Company”). Its portfolio includes famous brews including Budweiser, Stella Artois, Corona and Beck’s, Leﬀe and Hoegaarden, BudLight, Skol, Brahma, Antarctica, Quilmes, Michelob Ultra, Harbin, Sedrin, Klinskoye, Sibirskaya Korona, Chernigivske, Hasseröder and Jupiler, among others (ABInBev, “Our Company”).
ABInBev. “Our Company.” A Long Tradition of Great Beers. N.d. Web. 4 June 2016. http://www.ab-inbev.com/about-us.html
– “Our History.” This is Our Story. N.d. Web. 4 June 2016. http://www.ownyourfuture.ab-inbev.com/about-us/our-history/.
BeerHistory.com. “Miller History.” 1991. Web. 4 June 2016. http://www.beerhistory.com/library/holdings/millerhistory.shtml.
Bray, Chad. “Anheuser-Busch InBev Completes Agreement for SABMiller.” DealBook. The New York Times. 11 Nov. 2015. Web. 4 June 2016. http://www.nytimes.com/2015/11/12/business/dealbook/anheuser-busch-inbev-sabmiller-deal.html?_r=0.
The Editors of Encyclopedia Britannica. “InBev.” 11 Nov. 2015. Web. 4 June 2016. http://www.britannica.com/topic/InBev.
Gjorgievska, Aleksandra and Cordell Eddings. “Billion in Bond Market to Purchase SABMiller.” News. Bloomberg. 13 Jan. 2016. Web. 4 June 2016. http://www.bloomberg.com/news/articles/2016-01-13/ab-inbev-said-to-market-debt-to-help-finance-sabmiller-takeover.
Riley, Charles. “Anheuser-Busch InBev agrees to buy SABMiller in biggest beer deal ever.” Investing. 13 Oct. 2015. CNN Money. Web. 4 June 2016. http://money.cnn.com/2015/10/13/investing/ab-inbev-sabmiller-beer-merger/.
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