Regulator Raises Concerns Over Asahi Deal for AB InBev Brands

(Bloomberg) -- Asahi Group Holdings Ltd.’s $11 billion bid for Anheuser-Busch InBev NV’s Australian operations is facing questions from the country’s antitrust regulator, raising the possibility it will need to sell assets to proceed with the deal.

• The Australian Competition and Consumer Commission said in a statement Thursday that it has preliminary concerns that Asahi’s proposed acquisition of Carlton & United Breweries may reduce competition in the market for cider, as well as in the beer market.

Key Insights

• The ACCC said in its preliminary view that the deal would combine the two largest suppliers of cider in a highly concentrated market, possibly leading to higher prices. Cider made up about 3% of total alcohol consumption in Australia in 2017.
• The deal will likely require brand disposals, but Bernstein analyst Euan McLeish said the impact should be manageable. A divestiture of either the Somersby -- which holds a 30% share of the market -- or Strongbow cider brands is likely, he said.
• While the regulator also said the increased concentration in the beer market may also be a concern, McLeish said that doesn’t necessarily mean remedies will be required.

Market Activity

• Asahi shares dropped 1.1% to the lowest level since September in Tokyo trading Thursday. AB InBev shares were down as much as 1.7% in early trading in Europe, to the lowest intraday since March.

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• The regulator invited interested parties to comment on the competition issues by Jan. 22, and said it would make a final decision on March 20.

To contact the reporter on this story: Lisa Du in Tokyo at ldu31@bloomberg.net

To contact the editors responsible for this story: Rachel Chang at wchang98@bloomberg.net, Jeff Sutherland

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