AB InBev's $103 Billion SABMiller Deal and the Debt It Left

The last brewer big enough to matter

On the evening of October 10, 2016, a Belgian shell company that had been incorporated seven months earlier swallowed the world's largest brewer and the world's second largest in a single legal motion. Newbelco SA/NV absorbed Anheuser-Busch InBev by reverse merger, took its name, and issued 2,019,241,973 shares to the owners of both companies. In its own audited accounts AB InBev put the SABMiller purchase consideration at $103,136 million, or $113,808 million gross once $11,870 million of assumed debt was added and $1,198 million of acquired cash deducted, per its 2016 annual report on Form 20-F.

That made "Megabrew," as the trade press named it, the largest transaction in the history of consumer goods and one of the largest ever completed in any sector. It also ended an era. There was no third brewer of comparable scale left to buy, which is precisely why the deal happened and precisely why it has been so hard to judge since.

Three things the headline number hides

The £45.00 per share that SABMiller holders eventually received was not the price AB InBev first offered, and it was not the price every shareholder actually got. AB InBev opened at £38.00, was rejected four times, agreed £44.00 under a Takeover Panel deadline, and raised a final time only after sterling collapsed following the Brexit referendum. Meanwhile a parallel consideration built for two shareholders, Altria and the Santo Domingo family's BevCo, drifted so far above the cash offer that a UK court had to split the vote in two.

Underneath both sat the financing: a $75.0 billion committed facility, the largest corporate loan ever syndicated, taken out by a bond program that lifted net debt to $108.0 billion within a quarter. The interesting question is not what AB InBev bought. It is whether the map it acquired, Africa and Latin America, was worth the balance sheet it accepted and the register it divided to get there.

A cost machine running out of costs

AB InBev was not a brewer that happened to do deals. It was a deal platform that happened to brew, built by the Brazilian principals behind 3G Capital on a repeatable method: acquire a large incumbent, impose zero-based budgeting, strip overhead, and let margin do the work. The 2014 numbers in the offer document show how well it worked. Revenue of $47.1 billion, EBITDA of $18.5 billion, and an EBITDA margin of 39.4% after a 25 basis point expansion, on volumes of 459 million hectoliters.

The problem with a method that good is that it needs fresh material. Anheuser-Busch had been absorbed in 2008, Grupo Modelo in 2013 at $20.1 billion, Oriental Brewery in 2014 at an enterprise value of $5.8 billion. Each left less to buy. By 2015 the developed markets that generated most of AB InBev's profit were flat to shrinking in volume, and the company's own filings describe a business whose growth depended on price and mix rather than on more beer being drunk.

The strategic gap was geographic. AB InBev's seven zones covered North America, Mexico, both halves of Latin America, Europe, Asia Pacific and exports. They did not meaningfully cover Africa, and the offer document says so plainly: AB InBev "does not currently have any significant operations in Africa."

What SABMiller actually was

SABMiller was not primarily a portfolio of famous beers, whatever the Peroni and Grolsch headlines implied. It was a collection of dominant national positions in markets other Western brewers had never cracked. The Rule 2.7 announcement puts 94% of its lager volumes in markets where it held the number one or number two position, across more than 200 brands in more than 80 countries, plus one of the largest Coca-Cola bottling networks outside the United States.

The financial record was strong on its own terms. For the year ended March 31, 2015 SABMiller reported group beverage volumes of 324 million hectoliters, group net producer revenue of $26,288 million and group EBITA of $6,367 million. Since moving its primary listing to London in 1999 it had delivered a total shareholder return of 913.3% against 72.8% for the FTSE 100, measured to September 14, 2015.

The prize inside it was Africa, and the offer document quantifies why. The continent was expected to move from roughly 6.5% of global beer volumes in 2014 to approximately 8.1% by 2025, with African volumes growing at nearly three times the global rate. SABMiller traced its origins to South African Breweries in 1895 and had spent a century building the distribution that made that growth capturable. It was, in a literal sense, the only way to buy Africa.

The two assets that had to go before the deal could start

There was a structural awkwardness that shaped everything that followed. Two of SABMiller's largest businesses were the ones AB InBev could least plausibly keep: the MillerCoors joint venture with Molson Coors in the United States, where AB InBev already led the market, and the CR Snow joint venture in China, where a 2008 Chinese merger condition had explicitly barred AB InBev from acquiring an interest in Snow.

AB InBev's response was to pre-sell them. On the same day it announced the firm offer, it announced the sale of SABMiller's entire MillerCoors interest and the Miller global brand business to Molson Coors for $12 billion in cash. The CR Snow stake followed in March 2016. Pre-committing remedies before a regulator has framed a theory of harm surrenders negotiating room, and buyers usually resist it. AB InBev did the opposite deliberately, because what it was actually buying with those concessions was closing certainty, and closing certainty was the argument it needed to win a board that had already said no twice.

Four rejections in twenty-eight days

SABMiller's unaffected share price was £29.34 at the close on September 14, 2015, the last trading day before renewed speculation. AB InBev then worked through the register in public, which is what the UK Takeover Code forces a bidder to do once an approach leaks.

The October 7 proposal also carried a share alternative valued at £37.49, a 28% premium against the 44% premium on the cash, which is the first public appearance of the two-tier structure that would dominate the following summer. Chairman Jan du Plessis rejected it in the language of a man who intended to be paid more, telling investors the offer still undervalued the company "very substantially," per Fortune.

He was right about the money. Six days and two increases later the board recommended £44.00, roughly £1.85 per share above the offer it had just called inadequate, worth close to £3 billion across a register of about 1.62 billion shares. Whether that vindicates the defense or merely shows how much room AB InBev had left in its opening bid is the first genuinely contested judgment in the deal.

Put up or shut up (Rule 2.6)

Under the UK Takeover Code, once a possible offeror is publicly named it has 28 days to either announce a firm offer under Rule 2.7 or walk away and be barred from bidding again for six months. The Takeover Panel can extend the deadline at the target board's request. The rule exists to stop a bidder from holding a company in play indefinitely, and it converts a negotiation into a countdown that both sides can see.

The shareholder who wanted to sell

The board's leverage had a hard limit, and it sat on its own share register. Altria Group owned approximately 27% of SABMiller, a legacy of selling Miller Brewing into the group in 2002. BevCo Ltd, the holding company for Colombia's Santo Domingo family, owned another stake from the 2005 Bavaria acquisition. Together they held 430,000,000 and 225,000,000 shares, about 40.45% of the company.

Neither was a passive index holder, and Altria did not wait to be asked. While du Plessis was publicly rejecting the price, Altria issued its own statement urging engagement.

A target board negotiating against a bidder that has already secured the sympathy of two fifths of its own shareholders is negotiating with one hand. That is the practical reason the ladder moved so quickly in October, and it is also the origin of the structure that made the deal notorious: AB InBev did not need to persuade Altria and BevCo on price. It needed to solve their tax problem.

Two extensions and a firm offer

The mechanics of the pause are worth reading closely, because they show the Code working as designed. AB InBev's Rule 2.6 deadline was 5.00 pm on October 14, 2015. On October 13 the boards announced an agreement in principle at £44.00 and SABMiller asked the Panel for more time; the deadline moved to October 28. On October 28 AB InBev confirmed it had completed confirmatory due diligence and reconfirmed the financial terms, and the deadline moved again to November 4, then a final time to November 11.

The firm offer landed on November 11, 2015. Between the two dates AB InBev signed a $75.0 billion senior facilities agreement, on October 28, which is not a coincidence: a Rule 2.7 announcement must be accompanied by a cash confirmation, so the financing has to be committed before the announcement can be made, not after.

Rule 2.7 announcement

The firm offer announcement under the UK Takeover Code. Once made, the bidder is bound to proceed on the stated terms subject only to the disclosed conditions, and the announcement must set out the consideration, the conditions, and a confirmation from the financial adviser that the bidder has the resources to pay. It converts a negotiation into a commitment, which is why everything material about a UK deal appears in one document on one day.

Why the biggest holders could not take cash

Altria had held its SABMiller stake since 2002 at a very low book value. A cash sale would have crystallized the entire gain and triggered US corporate tax on all of it. A share rollover would not. Altria's own quarterly filing states the outcome precisely: it expected a total pre-tax gain of approximately $13.7 billion, or $8.9 billion after tax, and that the gain would be "deferred for United States corporate income tax purposes, except to the extent of the cash consideration received," per its Form 10-Q.

That single sentence explains the architecture of the whole transaction. AB InBev could not buy 40.45% of SABMiller for cash at any sensible price, because a large part of that cash would have gone straight to the US Treasury rather than to the seller. It had to offer paper. But it also could not issue that much listed stock without diluting its controlling Belgian and Brazilian reference shareholders, who held about 51.8% of AB InBev and whose own irrevocable undertakings were a pre-condition AB InBev refused to waive.

The answer was an instrument that behaved like equity for tax purposes and like a locked box for governance purposes.

Partial share alternative

An election offered alongside a cash offer that lets shareholders take some or all of their consideration in the bidder's shares instead. It is capped, so elections above the cap are scaled back pro rata, and shareholders usually have to elect for their entire holding rather than part of it. Bidders use it to keep large strategic holders on the register, to reduce the cash bill, and to give sellers with embedded capital gains a route to defer tax.

What the restricted shares actually were

Each SABMiller share tendered into the alternative received 0.483969 Restricted Shares plus £3.7788 in cash under the original terms. The Restricted Shares were unlisted, could not be admitted to trading on any exchange, could not be deposited into an ADR program, and were locked up for five years, convertible one for one into ordinary shares only from the fifth anniversary of completion. In exchange they ranked equally with ordinary shares on dividends and voting from day one, and carried director nomination rights.

The whole package was capped at 326,000,000 Restricted Shares, available for approximately 41.6% of SABMiller's shares, with elections above that scaled back pro rata. Altria and BevCo irrevocably undertook to elect it for their entire holdings.

At announcement the alternative was worth less than the cash, and every party said so. The Rule 2.7 announcement valued it at £41.85 per SABMiller share on November 10, 2015, against £44.00 in cash, and expressly noted that the figure was calculated before any discount for illiquidity. SABMiller's four financial advisers, Robey Warshaw, J.P. Morgan Cazenove, Morgan Stanley and Goldman Sachs, recommended the cash consideration as fair and reasonable and pointedly declined to express any view on the alternative at all.

The gap that opened after June 23, 2016

Then the United Kingdom voted to leave the European Union, and the two legs of the offer stopped moving together. The cash was fixed in sterling. The Restricted Shares tracked a euro-denominated AB InBev share price. Sterling fell hard against both the euro and the dollar, and the alternative that had launched at a £2.15 discount to cash inverted into a large premium.

The table is the entire controversy in three columns. Two shareholders holding 40.45% of the company were contractually committed to an instrument now worth roughly 14% more than what everybody else was being paid, and they had been committed to it since November 2015 for reasons that had nothing to do with foresight and everything to do with tax. Aberdeen Asset Management led the objection, joined by Elliott Management, TCI and Davidson Kempner, who had built positions in the target precisely because the structure looked breakable.

A pound more, and four billion dollars less

AB InBev's answer on July 26, 2016 was a £1.00 increase in the cash consideration, to £45.00, and an £0.88 increase in the cash element of the alternative, to £4.6588, with the exchange ratio untouched. It declared the terms final, which under the Code meant it could not raise again.

Read in sterling that was a concession. Read in dollars it was not. The November 2015 terms valued SABMiller's issued and to be issued share capital at approximately £71 billion, which at the exchange rates of the day was widely reported as roughly $107 billion. The July 2016 terms valued it at approximately £79 billion, which the same week was reported as about $103 billion. AB InBev raised its price and reduced its bill at the same time.

Aberdeen was unimpressed, telling The Grocer that the divergence between the two legs of the offer had compounded its discomfort.

The $12.3 billion nobody mentions

The story that Brexit made the deal cheaper for AB InBev is the single most repeated claim about this transaction, and the accounts show it is mostly wrong. From 2015 AB InBev had been hedging the sterling and South African rand cash consideration with foreign exchange forwards, because a buyer that commits to a fixed price in a currency it does not earn is running an enormous unhedged exposure between signing and closing.

Sterling fell, and those hedges lost money. The 20-F discloses a cumulative negative mark to market of $12.3 billion on the hedging of the purchase consideration across 2015 and 2016. Of that, $7.4 billion qualified for hedge accounting and was added to the consideration paid; the settlement of the portion that did not qualify, about $4.5 billion, ran through financing cash flow.

Where the $103 billion actually comes from

Three different "deal values" circulate for this transaction and all three are defensible, because they measure different things. The accounting bridge in the 20-F reconciles them, and it is the cleanest single exhibit in the whole file.

Two things in that bridge deserve attention. First, the £75.4 billion total equity value is close to but not identical to the £79 billion headline, because the headline valued the alternative at its market-implied worth on a single July day while the accounts value the Restricted Shares under IFRS fair value rules with an adjustment for their restrictions. Second, the hedging line is not a rounding item: $7,848 million of the $103.1 billion consideration sits in a foreign exchange hedges and other line, of which $7.4 billion is hedge-accounted currency loss rather than payment to shareholders.

The largest corporate loan ever written

The cash leg had to be committed before the firm offer could be announced, and there was no bond market large enough to do it in the time available. So AB InBev signed a $75.0 billion senior facilities agreement on October 28, 2015, syndicated across a bank group including Banco Santander, Bank of America, Bank of Tokyo-Mitsubishi UFJ, Barclays, BNP Paribas and Deutsche Bank. Bloomberg reported it as the largest commercial loan ever raised.

Bridge-to-bond financing

A large committed bank facility arranged to guarantee that an acquirer can pay, deliberately priced and structured to be unattractive to hold, with the explicit intention of refinancing it in the bond market before it is ever drawn in full. Its real product is certainty rather than capital: it satisfies the certain funds requirement that lets a bidder announce, and the facility is then canceled tranche by tranche as bonds are issued.

Take-out in two acts

The take-out was fast and enormous. In January 2016 Anheuser-Busch InBev Finance Inc. issued bonds producing aggregate net proceeds of approximately $47.0 billion, allowing AB InBev to cancel $42.5 billion of the facilities. The headline tranche, a $46 billion eight-part offering, was at the time the second largest corporate bond ever sold, and Bloomberg reported an order book of about $110 billion, enough oversubscription to cut yields and shave roughly $100 million off annual interest. In March 2016 a euro issue under the medium-term note program raised about €13.1 billion net and canceled a further $12.5 billion.

By closing, AB InBev drew only $18.0 billion under the facility, of which $8.0 billion sat in a five-year term loan. Everything else had been termed out into the bond market at investment grade rates, which is exactly what a bridge is for.

The cost showed up in the ratings rather than the coupon. Before the leak on September 15, 2015 AB InBev was rated A with a stable outlook by Standard & Poor's and A2 with a positive outlook by Moody's. S&P cut to A- stable. Moody's moved to a developing outlook, then concluded its review in May 2016 with a definitive A3 stable. A company that had operated at the upper end of investment grade chose a leverage profile it would spend the next nine years unwinding.

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Four regulators, four different theories

The transaction was pre-conditional on clearances in the European Union, the United States, South Africa and China, and conditional on approvals in Colombia, Ecuador, Australia, India, Canada and elsewhere. Each of the four principal regulators reached for a different theory, which is what makes the package instructive rather than routine.

The European Commission's concern was not simply that a competitor would disappear. Its decision of May 24, 2016 in case M.7881 found that European brewers already engaged in "follow the leader" pricing at national level, and that merging two of the four largest players would multiply the number of national markets where the survivors met each other, making tacit coordination easier to sustain and retaliation easier to threaten.

The remedy matched the theory and was brutal in scope: AB InBev committed to divest essentially the entire European business it had just agreed to buy. The US Department of Justice consent decree of July 20, 2016 took the MillerCoors divestiture as given and attacked distribution instead, capping the share of AB InBev's US volume that could flow through company-owned distributors at 10% and barring the termination of wholesalers as a result of the combination. China's MOFCOM, on July 29, 2016, defined beer markets by province and by price tier and required the CR Snow stake to be sold within 24 hours of closing. South Africa's Competition Tribunal cleared the deal on June 30, 2016 on conditions that had nothing to do with market structure at all: a R1 billion development fund, a five-year commitment against involuntary job losses, and the divestment of SABMiller's Distell stake within three years.

For a fuller treatment of how these processes differ, see our guide to antitrust and regulatory approval in M&A.

The twenty-four billion dollar clawback

Converted at the exchange rates reported at the time, the four disposals recovered roughly $24 billion against a $103.1 billion purchase consideration. That number is a genuine offset and also a trap. Netting it down to an "effective price" of about $79 billion flatters the deal, because the assets sold were among the most cash-generative and least volatile things SABMiller owned: a mature US joint venture, five stable European businesses, and a Chinese stake in the world's largest beer market by volume.

What survived the regulators was the thesis in its purest form. AB InBev kept Colombia, Peru, Ecuador, South Africa, the rest of Africa, and Australia. It sold the developed-market cash flow and bought the emerging-market growth, at a price set when that growth was still a forecast.

What a UK scheme of arrangement required

The structure that delivered all of this was baroque even by cross-border standards, because it had to satisfy English company law, Belgian takeover law, and the desire to leave a Belgian company as the surviving parent.

Scheme of arrangement

A court-sanctioned procedure under English law for a target to reorganize its share capital, used in most recommended UK takeovers instead of a tender offer. It requires approval by a majority in number of the shareholders voting who together represent at least 75% by value of the shares voted, plus a court sanction hearing. Unlike a tender offer it binds 100% of shareholders once sanctioned, which is why acquirers prefer it, and it is why the composition of the voting classes is a live legal question rather than an administrative one.

The reason the deal could not simply be a scheme is that AB InBev wanted the combined group to be Belgian, and an English scheme cannot merge an English company into a Belgian one. So the scheme was used only to move SABMiller into a new Belgian holding company, after which Belgian takeover law paid the cash and Belgian company law absorbed AB InBev itself. Five steps, three legal systems, one outcome.

The hundred-for-one exchange in step one looks like a technicality and is not. It exists so that a shareholder electing the alternative can tender exactly enough Initial Shares to fund the cash element and keep the rest, which is how one instrument could deliver two different mixes of cash and paper out of the same scheme. It also meant the decisive question was no longer commercial. It was whether all those shareholders belonged in the same room.

One class or two

Because a scheme binds dissenters, English courts will only sanction one where the shareholders voting together have sufficiently similar rights to make the vote meaningful. AB InBev's Rule 2.7 announcement flagged the problem on day one: given the arrangements with Altria and BevCo, SABMiller would have to ask the court whether those two should vote alongside everyone else or as a separate class.

By August 2016 the answer was obvious to everyone except the parties who wanted it otherwise. Two holders committed to an instrument worth £6.14 more per share than what the other holders were receiving were not, in any commercial sense, voting on the same proposition. On August 23, 2016 the High Court agreed to convene the meeting on the basis that Altria and BevCo would consent to the scheme separately, leaving all other shareholders as a single class in which the 75% threshold had to be cleared without them, as reported by The Grocer.

That was a real transfer of power. Under a single-class vote, 40.45% of committed support would have made the outcome close to automatic. Under two classes, a minority representing about 59% of the company held an effective veto.

95.46 percent

They did not use it. At the UK scheme court meeting on September 28, 2016, 677,594,656 shares voted in favor and 32,199,323 against, a 95.46% majority by value, comfortably clearing the threshold, and AB InBev's shareholders approved every resolution the same day.

The collapse of the revolt is easy to explain and worth explaining properly, because it is the general case rather than the exception. By September the register was dominated by merger arbitrage funds who had bought after the announcement and whose returns depended on the deal closing rather than on its fairness.

The alternatives had also run out. AB InBev had declared its terms final and could not legally raise them, there was no competing bidder and at that size there could not be one, and voting the deal down would have handed holders back a share that traded at £29.34 before the bid. Fairness was a real grievance and, by the time it came to a vote, an unaffordable one.

Closing week

The mechanics of the last fortnight were tightly choreographed: court sanction on October 4, SABMiller delisted from the London Stock Exchange by October 6, the Belgian offer opened and closed on October 7, control acquired the same day, and the Belgian merger effective at 7 pm on October 10. Trading in the new shares began on Euronext Brussels, Johannesburg, Mexico and, through ADSs, New York on October 11.

The share register that emerged contained the deal's final surprise. Of 2,019,241,973 shares, exactly 325,999,817 were Restricted Shares, against a cap of 326,000,000. The alternative that had launched at a discount and that nobody would opine on was oversubscribed to within 183 shares of its ceiling, and every elector was scaled back, including the two it had been designed for. Altria received 185,115,417 Restricted Shares where an unscaled election on its 430 million SABMiller shares would have produced roughly 208 million, plus approximately $4.8 billion of cash. It then bought 12,341,937 ordinary shares in the market for about $1.6 billion, lifting its holding to roughly 10.2% by late October.

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One hundred and eight billion dollars

AB InBev's net debt reached $108.0 billion at December 31, 2016, against $42.2 billion a year earlier. The 20-F attributes the increase to the payment for the combination net of cash acquired and divestiture proceeds received by year end ($48.8 billion), the $11.9 billion of SABMiller debt assumed, the $4.5 billion settlement of the unqualified hedges, $8.5 billion of dividends and $6.0 billion of interest and tax.

Against a company whose stated optimal capital structure was around 2x net debt to EBITDA, that was roughly 5.5x, per CNN Business. Financial policy stopped being a supporting consideration and became the strategy.

The dividend that had to go

The unwind was slower than promised, for reasons that were both external and self-inflicted. Emerging market currencies fell against the dollar through 2016, costing $2.8 billion of translated revenue in that year alone, and Brazil and South Africa, two of the pillars of the growth case, went into recession. In the United States, the core Budweiser and Bud Light brands kept losing share to craft and to premium imports.

On October 25, 2018 AB InBev halved its dividend, to €1.80 per share for the year from €3.60, freeing roughly $4 billion of cash a year for debt reduction. The shares fell 10% that day.

Fitch's Giulio Lombardi was blunter about the cause, telling CNN that AB InBev's US market share "has been constantly eroding" and questioning why the dividend had not been cut sooner. The criticism cuts in a specific direction that matters for the verdict: it targets the pace of repair and the health of the legacy US business, not the logic of buying SABMiller.

Selling growth to pay for growth

The asset sales that followed are the sharpest irony in the aftermath. In July 2019 AB InBev pulled a Hong Kong listing of its entire Asia Pacific business that had sought up to $9.8 billion, citing market conditions, then within days agreed to sell Carlton & United Breweries in Australia to Asahi for $11.3 billion, an implied 14.9x EBITDA. In September it relaunched the listing of the slimmed-down Asian business.

Budweiser Brewing Company APAC priced 1,451,704,000 shares at HK$27.00 and listed on September 30, 2019. AB InBev put net proceeds at approximately HK$38.2 billion, about $4.9 billion, with up to a further $739 million if the over-allotment was exercised in full, and stated that all of it would be applied to repay debt. It retained between 87.22% and 88.86% of the subsidiary.

Both transactions monetized assets acquired or expanded through the SABMiller deal in order to service the borrowing that had funded it. That is not a failure in itself; it is what a deleveraging plan looks like. But it does mean the group that emerged in 2020 was materially smaller than the one assembled in 2016.

Where the goodwill was buried

Purchase price allocation is usually treated as an accounting formality. Here it is the clearest available statement of what AB InBev thought it had bought, because IFRS forced management to say where the premium sat.

The transaction produced $74,083 million of goodwill in total, of which $73,736 million was allocated to the SABMiller units above; the small difference is currency movement between acquisition and year end. None of it is deductible for tax. The 20-F states that management's support for recognizing it rested in part on expected savings from "a zero based budgeting program," which is the 3G method written into the accounting.

Zero-based budgeting

A cost discipline in which every line of spending must be justified from nothing in each planning cycle rather than rolled forward from the prior year with an adjustment. It is the operating signature of 3G Capital's portfolio companies, it reliably produces large early savings in acquired businesses with layered overhead, and it is criticized for cutting the marketing and innovation spending that drives long-run volume. AB InBev cited it as a basis for the goodwill it booked on SABMiller.

Read the table as a map and the thesis is unambiguous: $19.1 billion of premium on Colombia, $17.9 billion on South Africa, $12.2 billion on Peru, $6.4 billion on the rest of Africa. AB InBev did not pay up for Pilsner Urquell or Peroni, which it sold. It paid for Bavaria, Backus and South African Breweries.

Synergies delivered, growth deferred

On the cost side the deal outperformed its own promise. The Rule 2.7 announcement quantified pre-tax cost synergies of at least $1.4 billion a year phased over four years. By August 2016 AB InBev framed the combined opportunity as $2.45 billion, being the $1.4 billion of transaction synergies plus $1.05 billion of savings SABMiller had already announced. In the 2016 annual report the company raised the total to $2.8 billion a year on a constant currency basis, with $547 million already reported by SABMiller and $282 million captured between April and December 2016.

The revenue side is where the thesis met reality. The company that was pitched on African and Latin American volume growth spent its first three years absorbing currency collapses, two recessions in core markets, and share loss at home, which is the recurring pattern in emerging market acquisitions: the volume forecast is often right and the dollar translation of it is often wrong. Our explainer on cost and revenue synergies in M&A covers why the two categories behave so differently after close.

The scoreboard, nine years on

For the year ended December 31, 2025 AB InBev reported revenue of $59,320 million, normalized EBITDA of $21,223 million and profit for the period of $8,477 million, with net debt of $60.9 billion against $60.6 billion a year earlier, per its 2025 annual report on Form 20-F. Net debt to normalized EBITDA sits at roughly 2.9x, against the 5.5x of 2016 and a stated optimal level of around 2x. S&P Global Ratings upgraded the company back to A- with a stable outlook in April 2023, citing resilient performance and the deleveraging trend.

Two comparisons frame the outcome, and both need care. The offer document said the combined group would have generated historical revenue of $64 billion and EBITDA of $24 billion; the group in 2025 generated less than both. That is not a like-for-like decline, because MillerCoors, five European businesses, Peroni and Grolsch, and the Australian business have all been sold since. The margin comparison is cleaner: $21,223 million of EBITDA on $59,320 million of revenue is a margin near 35.8%, against the 39.4% AB InBev reported standalone in 2014, before the acquisition. A company built on margin expansion runs a lower margin today than it did before its largest deal.

The most striking number is the one that has not moved. Goodwill stood at $117.9 billion at December 31, 2025, with indefinite-lived intangibles of $38.5 billion, and none of the SABMiller goodwill has ever been impaired. The comparison with Vodafone's Mannesmann writedown, where a peak-priced acquisition was formally conceded through the income statement, is exact and points the other way. Whatever else is true, AB InBev's auditors have never been persuaded that the assets are worth less than what was paid, though the 20-F does disclose that Colombia, South Africa, Rest of Asia Pacific and the United States are tested by discounted cash flow precisely because their invested capital sits above nine times EBITDA. For how these balances behave after a large acquisition, see our note on goodwill and intangibles in M&A accounting.

What is settled

Several conclusions no longer depend on interpretation. The transaction completed, on time, through the most complex three-jurisdiction structure attempted at that scale, and every regulatory pre-condition was cleared without litigation.

The financial execution holds up just as well. Cost synergies were not merely achieved but raised, from $1.4 billion to a combined $2.8 billion a year; the $75.0 billion bridge was refinanced into the bond market inside five months at investment grade; net debt has fallen from $108.0 billion to $60.9 billion and leverage from roughly 5.5x to about 2.9x. The goodwill has never been written down.

Equally settled is the price of getting there. AB InBev raised its own opening bid by £7.00 a share, lost $12.3 billion on the hedges protecting the consideration, sold roughly $24 billion of assets to satisfy four regulators, halved its dividend, sold Australia, and floated its Asian business, all inside three years of closing.

What is still argued

The first open question is fairness. AB InBev built a consideration structure to solve one shareholder's tax problem, and a currency move it did not cause turned that structure into a £6.14 per share advantage for two holders over everyone else. Aberdeen, Elliott, TCI and Davidson Kempner argued that this was a two-tier offer dressed as an election. AB InBev's answer, which the court effectively accepted by splitting the classes rather than blocking the scheme, was that the alternative had always been open to every shareholder on identical terms, that its value was uncertain in both directions, and that the majority could vote it down if it disagreed. The oversubscription of the alternative at closing is the strongest evidence for AB InBev's version and the strongest evidence that it had become genuinely valuable.

The second is whether the deal bought growth or only scale. The bull case points to what the regulators left behind: unassailable positions across Africa and the Andean markets, the fastest-growing beer geographies on earth, acquired at the last moment they were purchasable, with the goodwill intact and leverage now normal. The bear case points to a margin that is lower than it was in 2014, revenue that has grown slowly across a decade, a dividend that took years to rebuild, and the fact that the company's own repair plan required selling growth assets in Australia and Asia.

The verdict the record supports

On execution the record is not close. A transaction of this size that cleared four principal regulators, refinanced the largest loan ever syndicated inside five months, doubled its combined synergy and savings target and never impaired its goodwill is, by any operational measure, a well-run deal.

On value the record is genuinely unresolved, and pretending otherwise would be dishonest. The strategic logic, that the world's last two global brewers should combine before emerging market growth was priced in, was sound and remains sound. What is contestable is whether $103.1 billion and nine years of balance sheet repair were the right price for it, and that question cannot be closed while the assets carrying $74 billion of goodwill are still in front of most of the growth they were bought for. The most defensible reading today is narrower than either camp would like: AB InBev bought the right assets, structured the transaction to suit its largest shareholder rather than its average one, paid a price that consumed a decade of financial flexibility, and is only now in a position to find out whether the thesis was worth it.

1. 1Anheuser-Busch InBev, "Recommended Acquisition of SABMiller plc by Anheuser-Busch InBev SA/NV", Rule 2.7 announcement, November 11, 2015.
2. 2SABMiller and Anheuser-Busch InBev, "Agreement in principle and extension of PUSU deadline", October 13, 2015.
3. 3Anheuser-Busch InBev, Annual Report on Form 20-F for 2016, SEC EDGAR, March 2017.
4. 4Anheuser-Busch InBev, Annual Report on Form 20-F for 2025, SEC EDGAR, March 2026.
5. 5Altria Group, Quarterly Report on Form 10-Q for the quarter ended September 30, 2016, SEC EDGAR.
6. 6Anheuser-Busch InBev, "Anheuser-Busch InBev Announces Completion of Combination with SABMiller", October 10, 2016.
7. 7Anheuser-Busch InBev, "Anheuser-Busch InBev announces approval of its shareholders for combination with SABMiller", September 28, 2016.
8. 8European Commission, "Mergers: Commission approves AB InBev's acquisition of SABMiller, subject to conditions", case M.7881, May 24, 2016.
9. 9US Department of Justice, consent decree requiring the divestiture of the MillerCoors stake and changes to beer distributor practices, July 20, 2016.
10. 10"AB InBev Gets Record $75 Billion Loan to Buy SABMiller," November 11, 2015, Bloomberg.
11. 11"AB InBev Raises $46 Billion in Bond Market to Purchase SABMiller," January 13, 2016, Bloomberg.
12. 12Fortune, coverage of SABMiller's rejection of the £42.15 proposal and Altria's public support, October 7, 2015.
13. 13The Grocer, "AB InBev ups offer for SABMiller after investor pressure", July 26, 2016.
14. 14The Grocer, "High Court backs SABMiller's request to split crucial merger vote", August 2016.
15. 15Anheuser-Busch InBev, "Anheuser-Busch InBev Announces Offer Price and Allotment Results of the Initial Public Offering of Budweiser APAC on the Hong Kong Stock Exchange", September 27, 2019.
16. 16CNN Business, "The Budweiser beer empire was built on debt. Now AB InBev is racing to pay it down", July 24, 2019.
17. 17CNN Business, "A-B InBev slashes dividend as beer demand slumps in US", October 25, 2018.