By Andy Young

AB InBev (ABI) has confirmed that it plans to cut three per cent of its workforce once the acquisition and merger with SABMiller (SAB) is completed in October.

ABI currently employs around 150,000 people globally, while SAB has about 70,000 employees, some of those employees will leave the company when various brands, such as Peroni and Grolsch are sold, but analysts estimate the total number of jobs cut will total around 5500.

ABI has said that the three per cent of jobs to be cut does not include sales or front-office supply teams, as integration plans for those departments have not yet been completed.

Although the extent of job losses in both the brewers’ different locations is not yet certain, it is thought that the majority of the job losses will come from SAB’s current headquarters in London. When it revealed its timetable for the merger, ABI said the new company will be listed on the Belgian Stock Exchange, with secondary listings in South Africa, Mexico and the US, but nothing in London.

The new combined group’s headquarters will be in Leuven, Belgium and global management will be based in New York.

ABI is known for its aggressive cost cutting in a takeovers and mergers and Morningstar equity analyst Philip Gorham told Associated Press: “Clearly when you combine two companies that are so similar you’re going to have a lot of duplications in functions, such as back-office HR and marketing. An important part of ABI's playbook is taking out costs.”

Meanwhile it has been reported that the merger will see ABI and SAB pay around US$2bn in taxes and fees to advisers and bankers. The bulk of those payments, will be incurred by ABI, with around $725m going to the financing banks, which helped the brewer raise $46bn in debt to pay for the deal.

ABI needs backing from SAB shareholders for its 45 pounds per share offer along with a cash-and-share alternative valuing its target at 78.4 billion pounds (AU$136.51bn). Those shareholders will vote at a meeting on Sept. 28 and it is still widely expected that the deal will go through.

The Shout Team

The leading online news service for Australia's beer, wine, spirits and hospitality industries.

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