Anheuser-Busch InBev (AB InBev) says it plans to cut its workforce by 3 percent following its takeover of rival beverage alcohol company SAB Miller, according to a regulatory filinglast week.
These reductions, equivalent to thousands of jobs, will be implemented gradually over a three-year period following the completion of the merger. According to the Associated Press, Belgian-based AB InBev employs approximately 150,000 people while SAB Miller has about 70,000.
If the company stays true to the projected 3 percent cuts, this would affect an estimated 6,600 jobs. However, AB InBev says regulatory restrictions make it impossible to establish integration plans for certain departments. Because of this, the sales and front-office supply departments at the companies were not included in the estimate, meaning it’s unclear if more cuts are possible.
Upon integration, AB InBev says the group will operate out of its current headquarters in Leuven, Belgium, and the company will retain its global functional management office in New York. SAB Miller’s headquarters in Woking, England will likely be exposed to job losses. AB InBev expects the integration to include the closure of the SABMiller head office in London 12 months following completion. Jobs at SAB Miller’s operations in South Africa will be protected for five years under the terms of the agreement.
In addition, InAB InBev has agreed to divest certain SABMiller businesses to address competition concerns including SAB Miller’s European premium brands and MillerCoors.
In all, the company anticipates these moves will lead to annual cost savings of $1.4 billion four years after the deal.
The proposed $107 billion takeover will bring together the world’s two largest brewers, creating a global juggernaut. AB Inbev's brands include Corona, Stella Artois and Budweiser. SABMiller owns brands such as Miller, Peroni, Pilsner Urquell and Grolsch. According to the commission, at global level the merged entity will sell twice as much beer and earn four times more profit than Heineken, currently the third largest brewer, and five times more beer and 12 times more profit than Carlsberg, currently the fourth largest brewer.
The deal has the support of SAB Miller’s board and awaits shareholder approval. Despite recent concern with the transaction following the drop in value in the British pound, reports say the deal is expected to be approved in September.