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AB InBev Woos EU Regulators With Proposed Sale of SABMiller's Eastern European Brands

The deal could fetch $8 billion

Brenna Houck is a Cities Manager for the Eater network. She previously edited Eater Detroit and reported for Eater. You can follow her on the internet at @brennahouck.

AB InBev is continuing to reshuffle its assets as the corporation seeks international regulatory approval of its $106 billion merger with fellow beer giant SABMiller. Reuters reports that the brewer is proposing the sale of its eastern European holdings in an effort to woo the European Union's antitrust regulators.

The company announced on Friday that it has put an estimated $8 billion worth of SABMiller brands in the Czech Republic, Hungary, Poland, Romania, and Slovakia up for sale. It's AB InBev's latest move to ditch European assets, since the company agreed to sell SABMiller brands Peroni, Grolsch, and Meantime to Japanese beverage company Asahi for $3.41 billion.

The choice to sell labels like Pilsner Urquell in Czech Republic and Dreher in Hungary is as politically strategic as it is financial. Beer sales are falling in eastern Europe, making it a less attractive region for the company. Consequently, AB InBev is more interested in growing Latin American and African markets where SABMiller has a stronghold. "The eastern European markets may have provided an unwelcome and unnecessary distraction [to regulators], and valuation notwithstanding, we regard this asset sale as a net positive [for AB InBev]," Morningstar analyst Philip Gorham tells Reuters.

According to the Wall Street Journal, Asahi appears to be the most likely candidate to purchase the eastern European brands as regulatory issues would probably dissuade Carlsberg and Heineken from striking a deal with AB InBev. The European Commision is expected to rule on the AB InBev-SABMiller mega-merger by May 24.

AB InBev recently pledged $70 million to South Africa in order to demonstrate to government regulators in the country that its merger wouldn't hurt employment. Meanwhile, U.S. lawmakers have expressed concern that the merging of the two brewers might harm the American craft beer industry. If approved, the companies would together control 30 percent of the beer market worldwide and a staggering 75 percent of the U.S. beer market.