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Aug 30, 2014

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Merger of Miller, Scottish & Newscastle and South African Breweries rumored

Jan 28, 2002 - New reports have surfaced that a merger between Miller Brewing Co. of Wisconsin, Scottish & Newcastle and South African Breweries is in the works that would make the new company the largest brewer in the world, surpassing Anheuser-Busch.

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The Milwaukee Journal reports that the deal could be announced as early as March. As part of the deal, Miller's Milwaukee corporate headquarters -- and its roughly 1,000 jobs -- would likely remain intact, beer industry analysts said.

The agreement would allow Miller's corporate parent, Philip Morris Cos., to sell most of its relatively small beer business, while keeping a minority ownership stake in the merged company. A final deal has not been reached between Philip Morris and the two foreign brewers, sources said. While an announcement could come as soon as March, it's still possible that negotiations could fall apart.

Similar mergers have been rumors in the past and failed to materialize. Some analysts question the wisdom of Scottish & Newcastle and South African Breweries combining their businesses with Miller, which has lost sales and market share over the past two years.

Miller's market value has been pegged at roughly $5 billion -- more than twice what Philip Morris has invested in the company in 1970, but that number is dwarfed by $49 billion in tobacco sales. Also, Miller's sales volume declined by 2.7% in 2001, after a 4.0% decline in 2000, with sales slumps of Lite and Genuine Draft the main culprits.

Miller is the world's sixth larger brewer, SAB the fifth and Scottish & Newcastle the seventh.


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