Who’s next for AB-InBev?

Mr Brito, we hear you. The same day – 27 April 2016 – AB-InBev’s CEO Brito told shareholders that his future acquisitions are more likely to be in beer rather than in other beverages, a panel of Wall Street analysts at the Beverage Forum in Chicago said that AB-InBev could either do several smaller beer acquisitions or take on a heavyweight like PepsiCo or Coca-Cola.

Mark Swartzberg, an analyst with Stifel, told delegates that AB-InBev could take several USD 10 billion bites among the remaining beer industry players, referring to speculation that AB-InBev’s next potential targets are Diageo’s beer unit Guinness or France’s Castel group, which has a large African presence.

While Carlos Laboy, an analyst with HSBC, firmly expressed his belief that the Coca-Cola Company was top on AB-InBev’s list, citing Coke’s recent attempts at refranchising its bottler system as proof, Bonnie Herzog, an analyst with Wells Fargo Securities, pointed out there was a 50:50 chance that AB-InBev would go after Pepsi, not least because of its valuable snacks division.

Meanwhile, Mr Brito told media that AB-InBev does not believe in going too much outside beer because staying in beer makes the likelihood of success in integration higher.

Mr Brito reiterated his conviction that AB-InBev will seal its USD 100 billion-plus acquisition of SABMiller in the second half of the year.

Recent deal fantasies were strengthened by a share option plan, valued at over USD 300 million, for some 65 senior managers below the executive board, which would be granted if the company’s revenue hit USD 100 billion in 2020, 2021 or 2022.

AB-InBev’s revenue last year was USD 43.6 billion. With SABMiller, that would be a pro-forma of USD 66 billion, including disposals.

Without further acquisitions, this would require a giant leap, and as Mr Swartzberg emphasised, there is a theoretical likelihood that the bonus target could be missed.

However, though disagreeing on any immediate targets, the analysts expressed their belief that AB-InBev’s appetite for further deals was not satiated yet.