AB InBev makes formal £71bn bid for SABMiller November 11, 2015 5:27 pm
Talking about merger and acquisition, the acquisition of SABMiller by AB InBev is one of the larger and significant m&a recently. Anheuser-Busch InBev formally offered £71bn for SABMiller which happened to form the world's largest brewing takeover in the history. SABMiller share prices just pop over 8% over the news of m&a, through this it shown that it is once again a strong market efficiency which react a news quickly!
Is taking over the SABMiller is the right decision for AB InBev?
According to brewers association, SABMiller's trading statement showed a significant increase of the revenue in the second quarter of the year, meanwhile, ABInBev beer sales are stagnant in North America. This deal will lead to the 1/3 of market shares with brands such as Stella Artois, Grolsch, Miller Corona and Peroni under one company.
All the M&A activity tends to expand their business by joining forces which will result in favor of advantages of economic of scale and scope and thus lead to a greater profits. However, there are no guarantees of benefit over m&a activities!
With the such huge amount GBP71bn who is really benefits?
Such merger and acquisition for both brewer definitely causes a huge economic of scales. this lead to a cheaper cost to produce a range of products compare to a limit range of production. Futhermore, the combination bound both to enjoy a synergy gain in production, marketing and also distributions. With all these gain, it might bea ble to hike up the shares prices to maximize shareholder wealth. However, the reduce in the operation/manufacturing /personnel cost does not really brings advantages on consumer. it is not necessary for the dominant brewer to lower down the price. Drinkers will probably find that the chances for this deal to resulting in cost saving is way to diminish.
According to brewers association, SABMiller's trading statement showed a significant increase of the revenue in the second quarter of the year, meanwhile, ABInBev beer sales are stagnant in North America. This deal will lead to the 1/3 of market shares with brands such as Stella Artois, Grolsch, Miller Corona and Peroni under one company.
All the M&A activity tends to expand their business by joining forces which will result in favor of advantages of economic of scale and scope and thus lead to a greater profits. However, there are no guarantees of benefit over m&a activities!
With the such huge amount GBP71bn who is really benefits?
Such merger and acquisition for both brewer definitely causes a huge economic of scales. this lead to a cheaper cost to produce a range of products compare to a limit range of production. Futhermore, the combination bound both to enjoy a synergy gain in production, marketing and also distributions. With all these gain, it might bea ble to hike up the shares prices to maximize shareholder wealth. However, the reduce in the operation/manufacturing /personnel cost does not really brings advantages on consumer. it is not necessary for the dominant brewer to lower down the price. Drinkers will probably find that the chances for this deal to resulting in cost saving is way to diminish.
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ReplyDeleteGood Read!:D
ReplyDeleteWhat does it mean when a company is acquired?
Business acquisition is the process of acquiring a company to build on strengths or weaknesses of the acquiring company. A merger is similar to an acquisition but refers more strictly to combining all of the interests of both companies into a stronger single company.
DeleteHope it bring you a better insight :)