BEER INDUSTRY LEAGUE OF LOUISIANA

Beer Battle Ends as Budweiser, Miller Agree to Join Forces

Beer Battle Ends as Budweiser, Miller Agree to Join Forces

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BRUSSELS (AP) — The world’s top two beer makers agreed Tuesday to join forces to create a company that would control nearly a third of the global market and bring together top U.S. brands Budweiser and Miller Genuine Draft.

After turning down five offers, British-based brewer SABMiller accepted in principle an improved takeover bid worth 69 billion pounds ($106 billion) from Anheuser Busch InBev, which along with Budweiser makes Corona, Stella Artois and Beck’s.

However, the sheer scale of the deal is likely to run into resistance from regulators, notably in the U.S. and China, amid concerns it could stifle competition and decrease choice for consumers. They could force the companies to sell some brands — such as either the Budweiser or Miller brands.

Having dismissed previous proposals over the past few weeks as undervaluing the company, the directors of SABMiller unanimously agreed to an offer that values each SABMiller share at 44 pounds. SABMiller’s two biggest shareholders, Marlboro owner Altria and Colombia’s BevCo would get both cash and shares for their combined 41 percent stake.

AB InBev has until Oct. 28 to come up with a formal offer if U.K. regulators grant an extension to the takeover talks. In that time, the two sides will work on the terms and conditions of the takeover offer as well as the financing of the deal.

The markets think the deal is now very likely and SABMiller’s shares were trading right near the bid price. In early afternoon trading in London, they were up 9 percent at 39.47 pounds. AB InBev’s share price was 2 percent higher at 100.30 euros in Brussels.

In statements, the two companies said the all-cash offer represents a premium of around 50 percent to SABMiller’s share price on Sept. 14, the last trading day before renewed speculation of an approach from AB InBev emerged.

According to Tuesday’s statements, AB InBev has agreed to pay $3 billion to SABMiller if the deal fails to close because of failure to get regulatory approval or the clearance of AB InBev shareholders.

Connor Campbell, a financial analyst at Spreadex, cautioned that a deal “is going to come under intense, potentially deal-ending, scrutiny from regulators.”

The new company would have annual sales of $73.3 billion and its market share of 31 percent would dwarf that of its next biggest competitor, Heineken, with 9 percent.

Market leader AB InBev already has six of the world’s largest beer brands. SABMiller, which is based in London, has Peroni, Grolsch and Milwaukee’s Best among its stable of beers.

For AB InBev, a deal would allow it to bolster its presence in Africa and Australia, where it is not as dominant as it currently is in Europe, North Africa and Asia.

The beer industry has been consolidating for the past decade as brewers seek to gain clout with suppliers, distributors and retailers.

“The global beer market overall is largely flat and in some regions is declining as other beverages such as wine continue to penetrate,” said Professor John Colley of Warwick Business School. “Micro brewers and their highly differentiated cask ales also continue to make progress.”

AB InBev has a history of making acquisitions and will be looking to find cost savings from the deal as well as more clout with suppliers.

Colley says to “expect substantial redundancies” over the coming year, potentially in head offices and country management teams.

“AB InBev has both a reputation and demonstrable track record for being able to effectively extract these savings,” he said.

SABMiller employs 69,000 people in 83 countries. AB InBev has 155,000 workers in 25 countries.

Details of the savings have not been published yet and will probably have to wait until a deal is formally agreed upon.

Louise Cooper, an independent analyst in London, said one of the consequences of the higher deal price will be more job losses than the original plan may have envisioned.

“The more that the bidder offers, the more cost cutting needs to happen to make the deal work financially,” she said. “SAB executives have done a good job for their shareholders — and their own executive compensation schemes — by driving up the bid price. But they have not done such a great job for their employees, more of whom will have to lose their jobs.”

Beer battle ends

The Associated Press

 

 

Groundbreaking Held for New Crying Eagle Brewing Company in Lake Charles

Groundbreaking Held for New Crying Eagle Brewing Company in Lake Charles

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LAKE CHARLES, Louisiana — Crying Eagle Brewing Company expects its brewery for hand-crafted beers to open next spring.

Crying Eagle President Eric Avery tells KPLC-TV (http://bit.ly/1L5fmKM ) that they’ve spent two years planning and can’t wait to make their “unique vision a reality that everyone can share.”

The company recently broke ground for a 15,000 square-foot facility on more than 10 acres in Lake Charles.

It will include a two-story tap room, tasting room, bar, indoor and outdoor stages, private event facilities, and an outdoor beer garden. Crying Eagle also will offer tours, beer dinners featuring local chefs, live music performances, and a “brewers’ playground” for experimentation and customer feedback on new brew flavors.

Avery believes the first-of-its-kind facility in the Lake Area will be huge for tourism.

“When you have 500,000 people a month that visit our area, we have to believe that some of those will peel off to go see something new, unique, and original to our area,” he said.

The brewery’s brew master, Bill Mungai, has been crafting beer from home for 10 years and is now creating his own original beers for Crying Eagle.

“We want to really focus on the South Louisiana culture, the outdoors, we want to make beers that go well with hanging out outside, sitting by the fire, fishing, golfing,” Mungai said. “I’ve brewed many, many different styles of beer and just working on different recipes and ingredients to find what really we think will taste well, taste good, and work well in this market.”

Groundbreaking held for Crying Eagle Brewing

THE ASSOCIATED PRESS –

ATC in the News: Blaze Smoke Shop Owner Arrested on Misdemeanor Charges

ATC in the News: Blaze Smoke Shop Owner Arrested on Misdemeanor Charges

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LAKE CHARLES, LA (KPLC) – Yossi Galamidi, owner of Blaze Smoke Shop on Ryan Street, owes “thousands of dollars in back taxes” and was selling cigars and vapor products without a permit, according to Troy Hebert, Louisiana Office of Alcohol and Tobacco Control commissioner.

Galamidi’s attorney, Glen Vamvoras, however, said that Galamidi has caught up on his taxes and paid them several weeks ago.

Galamidi had been selling tobacco products without a permit since his expired on March 31, Hebert said. In addition, Galamidi was not registered to pay excise taxes.

“The fact that he wasn’t even registered to pay excise taxes shows he hasn’t paid any of those taxes, then the sales taxes will be what the auditor will find,” Hebert said. “That type of business — the reason why we’re not going to tolerate it is: think how unfair it is to all the other businesses that are paying their taxes and abiding by the law and operating legally and this guy here has been operating for well over six months now and not paying an excise taxes as well as having issues with not paying what he’s supposed to pay in sales taxes.”

Vamvoras said that since Galamidi was only issued a summons for a misdemeanor — selling tobacco products without a permit — he should not have been arrested. It was a “mission” to arrest Galamidi, Vamvoras said.

Vamvoras said that the ATC officer told him he had orders from Baton Rouge to arrest Galamidi, although local authorities refused to book Galamidi on a misdemeanor and released him on a summons.

If Galamidi was in violation of the law, it was unintentional, Vamvoras said, adding that both he and Galamidi were unaware that vapor products fell under a tobacco permit. Galamidi was in the process of renewing his license, he said.

“He had a license, he was renewing his license that had expired,” Vamvoras said. “He was in the process of renewing his license. Regardless, it’s a misdemeanor summons.”

As of now, Galamidi cannot sell tobacco products, Hebert said. The Department of Revenue had auditors at Blaze Smoke Shop Tuesday afternoon attempting to resolve the tax situation, Hebert said.

“He definitely has some issues over there,” Hebert said. “He’s certainly not operating within the parameters of the law. We’re not going to tolerate that type of activity so we’re going to shut him down. I think it’s unfair to all those other good businesses and that’s why we act swiftly on it.”

Vamvoras said Galamidi admitted he was behind in paying taxes, but paid what he owed several weeks ago. Representatives of the Department of Revenue were scheduled to show up Tuesday, but did not, Vamvoras said. Should they show up, Galamidi will allow them to look at his books.

Whether Galamidi can continue to sell glass pipes is out of the jurisdiction of the ATC, Hebert said.

Galamidi was arrested in May 2013 after the Calcasieu Parish Sheriff’s Office raided Blaze Smoke Shop and charged with unlawfully supplying a product for the purpose of falsifying a drug screen.

Galamidi pleaded guilty in October 2014 to one count of unlawfully supplying a product for the purpose of falsifying a drug screen as part of a plea deal that allowed him to get back 12,000 glass smoking devices that had been removed from his store.

Prior to opening Blaze Smoke Shop, Galamidi owned a smoke shop in South Carolina, where he also ran into controversy.

Johnathan Manning,  KPLC

Blaze Shop owner arrested

SABMiller Reportedly Rejects AB-InBev’s $100 Billion Buyout Offer

SABMiller Reportedly Rejects AB-InBev’s $100 Billion Buyout Offer

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SABMiller reportedly turned down AB-InBev’s initial $100 billion offer.

The world’s two biggest beer companies are poised to merge — but the smaller of the two is apparently playing hard to get. According to Bloomberg, beverage behemoth AB-InBev reportedly made an informal offer to take over SABMiller for $100 billion, but the latter has dismissed said offer as being “too low.”

News of the impending merger surfaced last month. Belgium-based AB-InBev produces big names like Budweiser, Corona, and Stella Artois, while London-based SABMiller makes Miller Lite, Peroni, and Pilsner Urquell; merging of the two would result in one conglomerate controlling 30 percent of the world’s beer market, and a whopping 75 percent of the American market.

A Bloomberg source told the paper “SABMiller communicated to AB InBev the terms at which it would be willing to negotiate after the rejection … No final decision has been made on a potential formal offer, and it’s possible [AB InBev] may walk away from a deal.” A financial analyst that spoke to Bloomberg seems to think the deal is a sure thing, however, saying, “AB InBev is unlikely to have gone this far unless it intends to see it through.” Meanwhile, a source tells the New York Post that SABMiller is “leaning toward fighting the expected ABI takeover bid,” noting that the company already rejected a $160 billion offer from a Swiss multinational company, Glencore, last year.

Of course, mega beer conglomerates are nothing new: Currently, half of the world’s beer is produced by just six different companies, thanks to a series of mergers and buyouts that began in the 1970s. Big beer corporations are also snapping up smaller craft brewers at an alarming rate.

Jeff Cioletti, beverage market expert and author of the upcoming book The Year of Drinking Adventurously, says that while he thinks the deal will likely go through, there are “a lot of regulatory hurdles” and “a lot of antitrust issues that will need to be ironed out” before that can happen. As for what the merger would mean for big beer consumers, he says, “I think it’s going to be pretty seamless, and people won’t really notice.”

The creation of such a beer behemoth would certainly give craft beer brewers and fans something to talk about, however: “At the very least, it creates this even bigger bogeyman for craft brewers to rail against because they’ve always been about creating the contrast between what they do and what the big guys do,” Ciocetti says. “Well, now the big guys are even bigger, so the David and Goliath narrative actually plays more into their favor from a marketing and PR standpoint.”

Eater has also reached out to both AB-InBev and SABMiller for comment on the situation.

SABMiller Reportedly Rejects AB-InBev’s $100 Billion Buyout Offer

by , Eater.com

These Places Banned Booze. Now They’re Dealing with Something Far Worse

These Places Banned Booze. Now They’re Dealing with Something Far Worse

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“Dry counties” that prohibit alcohol sales seem to have a bigger meth problem than other counties.

That’s the thought-provoking conclusion of a new paper by researchers at the University of Louisville. In the state of Kentucky, some counties (“dry”) prohibit alcohol sales completely. Others allow it only within certain municipalities (“moist,”) or don’t place restrictions on alcohol sales at all (“wet”).

The Louisville researchers noticed that dry counties had higher rates of meth lab busts, as well as higher rates of meth crimes overall. And the effect is significant: “if all counties were to become wet, the total number of meth lab seizures in Kentucky would decline by about 25 percent,” they found.

After running some statistical tests, the researchers found that this is more than just a simple correlation: “Our results add support to the idea that prohibiting the sale of alcohol flattens the punishment gradient, lowering the relative cost of participating in the market for illegal drugs,” they conclude.

In other words: people who buy alcohol in places where it’s illegal become accustomed to dealing with the black market. If you’re going to get punished whether you trade in booze or trade in meth, why not give meth a spin? “Alcohol prohibition becomes a gateway to other illegal activities,” as Tyler Cowen Alex Tabarrok sums it up at Marginal Revolution.

This research fits in with other findings showing harmful effects of localized alcohol prohibitions. A 2005 paper in the Journal of Law and Economics found that when Texas counties changed from dry to wet, their incidences of drug-related mortality decreased by 14 percent as people substituted alcohol for other drugs. Records from the Kentucky State Police show that dry counties tend to have higher rates of DUI-related car crashes than wet ones — presumably because when you live in a dry county, you have to drive farther to get your booze. A 2010 report from the Robert Wood Johnson Foundation found that binge drinking rates were often higher in Alabama’s dry counties than its wet ones.

There’s no question that alcohol is one of the most dangerous widely-available drugs on the market today. But findings like the ones above suggest that the best way to manage the risks of alcohol consumption is to regulate it thoroughly and thoughtfully, not ban it outright.

There may be a lesson here for marijuana legalizers and their opponents. Colorado and other states experimenting with legalization are generally giving counties and municipalities the option to allow or prohibit marijuana sales within their own borders. While there’s a case that’s a sensible approach, the lessons of county-level alcohol bans suggest that in the long run, local governments that ban marijuana sales may simply be inviting a more insidious set of problems.

Correction: Alex Tabarrok, not Tyler Cowen, wrote about this study for Marginal Revolution.

these-places-banned-booze-now-theyre-dealing-with-something-far-worse/

Christopher Ingraham, The Washington Post

 

Matthew McConaughey’s Brother Gets Year Supply of Beer for Naming Son Miller Lyte

Matthew McConaughey’s Brother Gets Year Supply of Beer for Naming Son Miller Lyte

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Matthew McConaughey’s older brother Michael, who goes by “Rooster,” may be a self-made millionaire, and a star in his own right with the hit new reality series “West Texas Investors Club” – but he still loves some free merch.

Rooster McConaughey loves beer so much much that he named his own son Miller Lyte, reports TMZ. It might sound outlandish, but apparently the older McConaughey is always seen with a can of his favorite beer in hand.

Little Miller is nine now but Miller’s parent company SABMiller, only recently caught wind of the branded moniker.

To reward McConaughey’s brand loyalty, SABmiller—which may soon merge with its biggest competitor and fellow beer giant Anheuser-Busch InBev—is sending Rooster 24 cases of Miller Lite, what the beer maker considers to be a year’s supply. At 24 cans per case, that’s 576 beers total—or 1 and a half beers a day… so it might not last the diehard Miller fan more than a few months but hey, free beer is free beer.

And although McConaughey loves his beer, it turns out he has a major soft spot for another one of America’s favorite adult beverages. Miller Lyte has an older sister named Margarita Olympia– but it turns out this was actually a family name. Great coincidence.

Matthew McConaughey’s brother gets year supply of beer for naming son Miller Lyte

FoxNews.com

Alcohol law revisions on tap

Alcohol law revisions on tap

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Baton Rouge might open the door for more beer, wine and spirits tastings at retail locations across the city, as East Baton Rouge Parish Metro Council members soon will consider changing how the city regulates them.

 Two items going before the Metro Council in the next couple weeks could change how alcohol is controlled.

The first is focused on tastings and would allow retail locations to buy licenses to hold tastings for wine, beer and liquor. Currently, most retail locations are not allowed to let customers sample wine unless they have a special event permit, according to Councilman Buddy Amoroso.

The second change would give a microbreweries a more up-to-date definition in city ordinances, now that the craft beer trend has taken off in the Baton Rouge area.

Amoroso is sponsoring the sampling ordinance update and is co-sponsoring the microbrewery change. He said one of the main goals is bringing Baton Rouge’s rules up to date with state alcohol regulations.

“We’re making it easier for these retailers to be able to have sampling, but there would still be controls in place,” Amoroso said.

Sampling licenses would cost $120 a year, or retailers could purchase a one-time event permit for $60.

The concept of wine tasting in Baton Rouge is still relatively new, as Amoroso said they have been allowed since about a decade ago.

The ordinance relating to microbreweries also would allow microbrewers and microdistillers to obtain licenses specifically geared toward their operations. Amoroso said the ordinances in effect were written before the concept of microbreweries existed, and current laws are aimed at larger beer manufacturers.

“It’s really to kind of help the craft beer emerging industry,” Amoroso said.

The ordinances should be introduced to the Metro Council on Sept. 23, and the council is expected to vote on them in October.

Alcohol law revisions on tap

Andrea Gallo, The Advocate

Boston Beer’s Bottled-Up Stock to Bubble Higher

Boston Beer’s Bottled-Up Stock to Bubble Higher

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Investing in Boston Beer has been a mug’s game this year.

Since hitting a 52-week high of $325 in January, shares have tumbled by more than $100 amid flagging demand. However, investors should stop crying in their beer and hoist a glass to the opportunity offered by Boston Beer (ticker: SAM ).

Beer industry consolidation is Topic A today. SABMiller ( SAB.UK ) confirmed that it is being courted by Anheuser-Busch InBev ( BUD ), a potential deal that would create a brewing giant worth more than $250 billion. SABMiller’s London-based shares rallied by 20% while Anheuser rose 7% and Molson Coors Brewing ( TAP ) jumped 14%. Boston Beer, however, wasn’t invited to the party, climbing a mere 0.4% to $223.04.

Boston Beer is revitalizing its iconic Samuel Adams Boston Lager brand. Bloomberg News

While a takeover of Boston Beer is possible (more on that below), pessimism surrounding the stock seems overdone, especially considering that almost 19% of the float was being sold short as recently as Aug. 31. Boston Beer sales have taken a hit from smaller and nimbler companies but is battling back to revitalize its iconic Samuel Adams Boston Lager brand, while investing in new products that cater to changing tastes.

Founded in 1984 by C. James Koch, Boston Beer revolutionized the beer industry by taking a family recipe for a craft beer, which he named after a revolutionary war patriot, and turned it into a national sensation.

In the eyes of some hard-core fans, the company is too big to be considered a craft brewer. Today, Boston Beer sells more than 80 beers under the Samuel Adams brands, as well as malt beverages under the Twisted Tea brand and hard ciders under the Angry Orchard brands.

Until 2015, Boston Beer has been a smash success. Its stock more than tripled between 2012 and early this year but has since tumbled 30% as the company reduced beer volume growth guidance and reported weak sales for the Samuel Adams brand. However, most of the risk seems to be reflected in the stock.

Boston Beer is growing profit briskly, with earnings of $7.35 per share expected this year and $8.37 next year. The stock trades at 26.6 times projected 2016 earnings-per-share estimates and long-term profit is expected to rise 17%, which translates into a reasonable 1.6 PEG (price-to-earnings growth) ratio. The broader industry is seen growing profits 12%.

With sales of $980 million last year, Boston Beer is one of the largest remaining U.S. headquartered beer makers. So it did not go unnoticed in July when Koch, while testifying before a Senate subcommittee about increased takeovers of American beer makers by foreign companies, said he’d “likely be the last American owner” of Boston Beer and that bankers regularly pitch him on selling the company.

The comments raised questions about a possible sale with some investors expecting a foreign buyer to step up. Now, however, is not an ideal time to seek out a buyer given Boston Beer’s share price performance. And Koch, who controls the company’s class B shares, seems in no hurry to sell (even if a weak stock price and industry consolidation entice potential suitors).

With new packaging and a national ad campaign, Boston Beer expects results for its Sam Adams brands to rebound next year. Meanwhile, Twisted Tea, Angry Orchard and Boston Beer’s other supplemental brands are driving growth in depletion, a key metric that measures how quickly products move from the warehouse to consumer outlets.

And through the company’s Alchemy & Science subsidiary, an incubator business it launched in 2011, new products are hitting store shelves. That includes new craft beers, as well as Traveler, a line of fruit-flavored beers known as shandies, and Coney Island Hard Root Beer, the latest product from the 2013 acquisition of the Coney Island craft beer brand.

Though demand for Boston Beer’s stock is down, we think things are looking up.

Boston Beer’s Bottled-Up Stock to Bubble Higher

Beer Giant Anheuser-Busch looking to Buy Miller Parent Company

Beer Giant Anheuser-Busch looking to Buy Miller Parent Company

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Anheuser-Busch InBev, the maker of Budweiser and Corona, said Wednesday it has made an offer to SABMiller Plc, the owner of Miller Genuine Draft and Peroni, to unite the world’s largest beer makers.

While no specific offer has yet been made, the combined company would have a market capitalization of some $275 billion and be by far the largest brewer in the world. That could potentially draw objections from regulators worried the deal might stifle competition and lead to higher prices for consumers.

“AB InBev’s intention is to work with SABMiller’s Board toward a recommended transaction,” said AB InBev in a statement. “There can be no certainty that this approach will result in an offer or agreement, or as to the terms of any such agreement.”

The beer industry has seen years of consolidation as brewers seek to sustain growth amid changing tastes that include a move towards craft beers and wine.

SABMiller became the world’s second-biggest brewer in 2002, when South African Breweries took over Miller Brewing Co., based in Milwaukee, Wisconsin.

Buying SABMiller would strengthen AB InBev’s position in fast-growing economies in Africa and Asia. SAB Miller employs about 69,000 people in more than 80 countries, including Australia, Zambia, Colombia and the Czech Republic.

London-based SABMiller said Wednesday that it “would review and respond as appropriate to any proposal which might be made.”

AB InBev was created in 2008 when Brazilian-Belgian brewer InBev bought U.S. icon Anheuser Busch. The company has operations in 25 countries and makes more than 200 beers, including Stella Artois and Beck’s.

SABMiller sold 324 million hectoliters (8.56 billion gallons) of lager, soft drinks and other alcoholic beverages in the year ended March 31, generating group net producer revenue of $26.2 billion. AB InBev, by contrast, sold 459 million hectoliters and had revenue of $47.06 billion.

Under U.K. takeover rules, AB InBev has until 5 p.m. on Oct. 14 to make an offer for SABMiller or walk away.

Beer giant Anheuser-Busch looking to buy Miller parent company

Associated Press

AB InBev, SABMiller Deal Expected to Face Global Antitrust Grilling

AB InBev, SABMiller Deal Expected to Face Global Antitrust Grilling

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World-wide footprint of the two brewers means any deal would face tough scrutiny

 

Anheuser-Busch InBev NV is attempting to forge a global brewing juggernaut by acquiring chief rival SABMiller PLC, but a proposed tie-up would face intense antitrust scrutiny and send shock waves far beyond beer.

Regulators likely would press for major concessions from AB InBev, particularly in the U.S. and China, to put the brakes on two brewers that together already produce nearly a third of the world’s beer and span hundreds of brands including Budweiser, Corona and Peroni. AB InBev and SABMiller had 20.8% and 9.7% world-wide market shares by volume last year, respectively, Euromonitor International estimates.

An intricate web of corporate alliances at AB InBev and SABMiller, including competing bottling operations for soda rivals Coca-Cola Co. and PepsiCo Inc., only heightens the complexity of negotiations. Also factoring into any potential deal: U.S. cigarette giant Altria Group Inc., which owns a 27% stake in SABMiller.

Because of the global reach of AB InBev and SABMiller, they will likely have to seek antitrust clearance from jurisdictions around the world, a process that could easily take a year, antitrust experts said.

“A lot of different enforcers are going to want to look at this. You could have some surprises here and there,” said Darren Tucker, an antitrust lawyer at Morgan Lewis & Bockius LLP.
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In Latin America some divestitures could be required. SABMiller has a 95.1% market share in Peru, while AB InBev has 4.1%, according to Euromonitor. In Ecuador, SABMiller controls 92% of the market; AB InBev has 7.7%.

The biggest regulatory hurdle, though, is in the crucial U.S. market, where Belgium’s AB InBev already has a roughly 45% market share and U.K.-based SABMiller controls a further 25% through its MillerCoors LLC joint venture with Denver-based Molson Coors Brewing Co. AB InBev and MillerCoors also control the only two U.S. beer-distribution networks.

The likely outcome? AB InBev would have to sell SABMiller’s 58% stake in MillerCoors, whose brands include Coors Light and Miller Lite. It might have to settle for a discount because Molson Coors has the right to boost its stake to 50% and name MillerCoors’s chief executive if SABMiller is acquired. Molson Coors also has the right of first refusal for the remaining 50%, and the brewer’s share price surged more than 10% Wednesday in anticipation of a deal.

AB InBev already had to dramatically restructure its $20.1 billion acquisition of Mexican brewing giant Grupo Modelo SAB in 2013 after the U.S. Justice Department sued to block the deal. AB InBev eventually agreed to sell an additional $2.9 billion in assets to U.S.-based Constellation Brands Inc.

Another potential regulatory headache is China, where AB InBev had an estimated 14% volume market share last year, according to Euromonitor. Chinese authorities could require the brewer to exit SABMiller’s joint venture with China Resources Enterprise Ltd. , which has 23% of the market and produces the top-selling Snow brand.

While the companies’ combined market share in Europe would be lower than in the U.S. or China, antitrust experts don’t expect an easy ride in Brussels.

Margrethe Vestager, the European Union’s new antitrust chief, has repeatedly warned that mergers shouldn’t happen at the expense of consumers. Her agency filed formal charges against Google Inc. and Gazprom within a single week in April.

“The argument goes that we need to protect companies, to help them become bigger companies, otherwise they can’t take on international rivals,” Ms. Vestager said in March. “I’m not convinced about these arguments.”

Diana Moss, president of the American Antitrust Institute, a group that favors strong antitrust enforcement, said a merger would likely spell higher prices for U.S. consumers and could also make life harder for smaller craft brewers. Given the already-concentrated U.S. beer market, it would be hard to find a buyer for divested assets that would be able to fully restore competition lost by the merger, she added.

Carbonated soft drinks further complicate merger negotiations. AB InBev and its Brazilian unit AmBev have agreements to make and distribute drinks for PepsiCo across much of Latin America, including Brazil, Argentina, Uruguay, Bolivia and parts of Peru. SABMiller, meanwhile has bottling partnerships with Coca-Cola in 23 African markets as well as in El Salvador and Honduras.

Coke is believed to have contractual rights that would allow it to shift bottling to new partners if there is a change of control at SABMiller. SABMiller and Coke declined to comment, but SABMiller has disclosed in regulatory filings that a change of control at the company would give Coke “certain rights” under their bottling agreements.

AB InBev’s bottling agreements with PepsiCo are set to expire at the end of 2017. The agreements are automatically extended for another 10 years unless either company gives written notice at least two years before they expire.

Altria, the largest U.S. tobacco company, will also have a big say in any deal. The Marlboro maker was left with 27% of SABMiller after its predecessor company Philip Morris Cos. sold Miller Brewing Co. in 2002 to South African Breweries PLC for $3.6 billion in stock.

Altria declined to comment Wednesday on AB InBev’s approach to SABMiller.

Colombia’s Santo Domingo family owns 14% of SABMiller and also will play an important role in clinching any deal. SABMiller bought the family’s controlling stake in Grupo Empresarial Bavaria SA, South America’s second-largest beer producer, in a $5.6 billion cash-and-share deal in 2005.

AB InBev, SABMiller Deal Expected to Face Global Antitrust Grilling

Mike Esterl, The Wall Street Journal.  Brent Kendall, Tom Fairless and Saabira Chaudhuri contributed to this article.

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