AB InBev, owner of a massive portfolio of beer brands including Budweiser and Becks, is expected to sell $46 billion worth of bonds to finance its purchase of fellow beer giant SAB Miller, per the Financial Times (paywall). According to Dealogic data, that would be the second-biggest offering ever, behind Verizon’s $49 billion deal in 2013 that landed it the other half of Verizon Wireless.
What shouldn’t be a surprise is that so many of those deals were acquisitions that took place last year (think Activis acquiring Allergan or Charter Communications buying Time Warner Cable). As Quartz’s Richard Macauley explained back in August, 2015 was a banner year not just for M&A, but for M&A mega-deals:
However, in value terms, again by extrapolating Dealogic data, the total value of this year’s M&A spend is on track to reach $4.7 trillion. That’s higher than 2007’s record $4.6 trillion. The soaring value of this year’s bumper M&A spend then is the result of mega-deals; the mean average value of each merger or acquisition this year is $125.4 million, well above the average values seen in any other year since at least 2000:
Indeed, global borrowers have taken advantage of the post-crisis era’s low rates to stock up on debt, much of it financing M&A.
And given the right circumstances, investors are more than happy to hand over gobs of cash for it. While AB InBev had originally sought roughly $30 billion, the FT reported that there was $120 billion in orders from investors. These beer bonds are just sating that thirst.
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