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Sep 21, 2014

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AmBev must slim down for merger

Brazilian officials order it to sell one of three breweries

Feb 1, 2000 - Brazilian brewing giants Brahma and Antarctica have been told they must sell one of their three brands in order for their proposed merger to go through.

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A Brazilian Justice Ministry report said that the merger of the top three brands -- Brahma, Antarctica and Skol -- could harm consumers. The proposed firm, Companhia de Bebidas das Americas (AmBev) has refused to comply with an earlier ruling along the same lines by the nation's finance ministry. However, this report gives AmBev the option of selling Antarctica (with 15% of the market) or Skol (26%), while the earlier ruling had been that is must sell Skol

"The report," said Secretaria de Direito Economico spokeswoman Geovana Botti, "argued that should, for example, AmBev raise the price of Skol, most consumers would simply migrate to Brahma or Antarctica, the country's two other top brands, which means that AmBev wouldn't have much to lose by raising the prices of one or two of its three brands."

As a result, the SDE said the merger shouldn't be approved unless AmBev sells one of those brands and it factories, distributing firms and other assets.

Last summer, Brahma and Antarctica announced a merger to create AmBev, the world's third largest brewer with assets estimated at between $3.8-4.8 billion.


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