While we were happily shopping, the UK's Telegraph reported that Coca-Cola could be AB InBev's next acquisition target. This British media outlet also made a 'bold guess, careful verification,' and their reasoning is as follows: First, AB InBev has a '2020 Dream Incentive Plan,' meaning that within the next four years, if the company achieves $100 billion in revenue, its 65 senior executives can share a $350 million bonus, which split evenly would give each person $5.4 million. But if this dream isn't realized, the bonus is gone. After acquiring SABMiller, the company's annual revenue is $55 billion, still a long way from the target. Therefore, with weak organic growth, they have no choice but to continue 'buying, buying, buying.' Second, according to sources close to AB InBev's Brazilian shareholders, Coca-Cola is one of the acquisition targets. Third, acquiring Coca-Cola seems out of reach, but the Telegraph analyzed that dreams are still worth having, just in case they come true! First is the acquisition logic. AB InBev has already bought the industry's second-largest player, leaving the third far behind. It's time to look beyond beer to other beverages. Moreover, soft drinks have similar distribution channels, suppliers, and bottling systems, which could save a lot of money! Second, AB InBev's shareholder Jorge Lemann and Coca-Cola's shareholder Warren Buffett's 'relationship is heating up.' Previously, they teamed up to broker the Kraft and Heinz merger. Who knows if they'd be willing to arrange another 'marriage'? Finally, Coca-Cola's annual revenue is $45 billion. Even if math was taught by a PE teacher, it's clear this could help AB InBev achieve its '2020 Dream.' Some might say this British media has a vivid imagination, but our editor-in-chief, a bystander, notes that this kind of rumor isn't the first time! In February this year, Susquehanna Financial Group speculated that Coca-Cola could be AB InBev's next acquisition target if AB InBev decided to enter the soft drink industry. In September, Susquehanna analyst Pablo Zunaic again suggested that AB InBev might acquire PepsiCo or Coca-Cola. However, after analysis, he concluded that acquiring PepsiCo would be a more reasonable move. After AB InBev acquired SABMiller, both HSBC and investment firm Stifel Nicolaus believed that AB InBev would acquire Coca-Cola, and possibly much sooner than expected. The merger would create significant synergies. Actually, our editor-in-chief would like to ask: Coca-Cola or Pepsi, even if the 2020 dream is achieved, what then? Both soft drinks and beer are precarious categories, so next, are they going to buy the entire universe? Source: Beer Daily (ID: beerdaily)
Capital, Earnings & M&A
Faster Than You Think: AB InBev May Acquire Coca-Cola
While we were happily shopping, the UK's Telegraph reported that Coca-Cola could be AB InBev's next acquisition target. The British media made this bold guess based on several reasons: first, AB InBev has a '2020 Dream Incentive Plan' where if the company achieves $100 billion in revenue within four years, 65 senior executives would share a $350 million bonus, each receiving about $5.4 million. However, after acquiring SABMiller, annual revenue is only $55 billion, far from the target, so they may need to continue acquiring. Second, sources close to AB InBev's Brazilian shareholders suggest Coca-Cola is a target. Third, while acquiring Coca-Cola seems distant, the Telegraph analyzed that dreams are worth having.