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02/17/2017

More on MegaMerger Between 3 AB Distribs in Southeast; Mergers “Challenging”

Blockbuster southeast merger between 3 AB distribs in GA, SC and NC had everyone buzzin’ at SAMCOM and beyond.  Recall the 3 distribs are Southern Eagle in GA and SC (14 mil cases), R.A. Jeffreys in North Carolina (approx 18 mil cases), and Crown Bevs in Florence, SC (2.5 mil cases). They will total about 35 mil cases and become a major force in region, pending supplier approval. 

Consultant Andy Christon, who is not involved in deal, knows a hot topic and put out piece called “Power Play on the Coastal Plain,” earlier this week, right when AB distribs at SAMCOM.  “Even under the best of circumstances, mergers are challenging,” noted Andy.  “Few economic benefits are initially apparent” and “a modest reduction in General and Administrative expense is the most that could be expected.”  So “a strategy other than bottom line profit is likely driving this proposed alliance,” he continued.  Distribs did this to improve prospects for long term growth, INSIGHTS understands, not for synergistic savings.    

Other distribs may have to rethink their game plan, according to Andy.  “Contiguous distributors will be forced to reconsider their business succession plan” if combo “proceeds,” he added.  Amidst rumblings of some supplier dissatisfaction with becoming smaller pieces of a much bigger biz, Andy also said deal could “give rise to a behemoth beholden to no one. Over time, suppliers could lose share of mind and alternatives.  For this reason, we believe that AB, Yuengling, Constellation and other suppliers will take a hard look before tying the knot of approval in this big marriage.”  Laws favorable to distribs in those states, and these distribs reportedly looking to close deal in near future. Tho mergers often done without money changing hands, this merger “seeking external financing,” Andy told INSIGHTS, either “a line of credit to make offers to other distribs” or to “realign ownership stakes.”  Maybe so, but no detail available.  Then too, some misinformation floating around about this very significant deal.  Stay tuned. 

Publishing Info

  • Year: 2017
  • Volume: 19
  • Issue #: 32
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