Foreign Direct Investment: SAB Miller

Paper Summary:

Many companies are expanding globally and investing in foreign companies. Some companies choose to expand, while others acquire existing foreign businesses. South Africa Brewery recently purchased the Miller Brewing Company. The paper describes this purchase, along with the economic picture of the country chosen. It also assesses important reasons for foreign direct investment (FDI) in the U.S. and provides a forecast of the long-term results of this FDI.

From the Paper:

"Philip Morris Inc. agreed to sell its Miller Brewing Company to South African Breweries PLC for $5.6 billion, creating the world's second-largest brewer. The sale price included $3.6 billion in stock and $2 billion of Miller Brewing debt. New York-based Philip Morris will hold 36 percent of SABMiller PLC, the company formed by the merger. SABMiller will continue to be based in London. Philip Morris has agreed not to sell any shares of SABMiller until June 30, 2005, or purchase any further shares until Dec. 31, 2004. The merger establishes SABMiller as the No. 2 brewery, behind St. Louis-based Anheuser-Busch (A-B), the world's largest brewer. Prior to the merger, Miller was the second-largest brewer in the United States with a 20 percent market share and the sixth largest worldwide. A-B has about a 45 percent market share in the United States, according to recent figures."

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