Investing.com -- Shares in TAP rose nearly 3% on Wednesday, after the U.S. Department of Justice announced that it has reached a settlement with ABI that will require the brewing giant to divest the entirety of SABMiller (LON:SAB)'s U.S. division, including the company's stake in MillerCoors.
The divestiture of MillerCoors to MolsonCoors allows Anheuser Busch InBev to move forward with its acquisition of SABMiller, a deal that will create the largest beer company in the world. Under a complaint filed by the Justice Department, the joint company would have assumed control of approximately 70% of all beer sold in the U.S. upon the completion of the deal. In some markets throughout the U.S., the Department estimated that the new company could have controlled as much as 90% of all beer for sale, significantly lowering competition in at least 50 markets nationwide.
In addition, the settlement prohibits Anheuser Busch InBev from instituting practices that provide disincentives for distributors from running promotions of the company's competitors, namely craft beers and top imports. The settlement also includes provisions that prevents Anheuser Busch InBev and MolsonCoors from engaging in manipulative practices to work in coordination to raise beer prices.
"The remedy we secured will help preserve and promote competition in the multi-billion dollar U.S. beer industry," said Deputy Assistant Attorney General Sonia Pfaffenroth of the Justice Department’s Antitrust Division. "The two largest U.S. brewers – ABI and MillerCoors – will now remain independent competitors after the deal.
The settlement also preserves the ability of smaller brewers – including brewers of craft and import beers – to compete against ABI by protecting their access to important distribution networks. Independent distributors that sell ABI’s beer will have the freedom to sell and promote the variety of beers that many Americans drink."
As part of the divestiture, MolsonCoors will acquire 58% of SABMiller's stake in MillerCoors, including the company's entire brand portfolio outside of the U.S. The SABMiller-Anheuser Busch InBev is still subject to review from regulatory authorities in China.
"This represents a critical milestone on our journey to take full control of MillerCoors upon the closure of the AB InBev-SABMiller merger," said Mark Hunter, CEO of MolsonCoors. "The acquisition will allow us to simplify decision-making and reduce the complexities of dual ownership; it will allow us to become a more integrated and efficient brewer; and it will allow us to become a more effective competitor as a single owner, promoting consumer choice in an increasingly diverse and fast-growing brewing industry.”
Shares in MolsonCoors closed Wednesday's session at 100.80, up 2.77 or 2.83% on the day. MolsonCoors shares were inactive in after-hours trading.