AB InBev, SABMiller reach agreement on acquisition

The world's two biggest brewers agreed on Tuesday to create a company making almost a third of the world's beer after SABMiller accepted an offer worth more than $100 billion from larger rival Anheuser-Busch InBev.

The SABMiller board said it would give its blessing to a fifth proposal from its sole larger rival. If it goes through, the deal would rank in the top five mergers in corporate history and be the largest takeover of a UK company.

After repeated rejections to its lower proposals, AB InBev said on Tuesday it was willing to pay £44 in cash per SABMiller share, with an alternative for cash and shares set at a discount and limited to 41% of SABMiller shares.

SABMiller has indicated that its board would be prepared to accept the offer and has asked for a two-week extension to the UK-imposed deadline set for 16:00 GMT on Wednesday for a formal bid. The new deadline is 28 October.

"We have written extensively on the attractions of (an ABI/SAB combination) since 2011 and continue to see major long-term benefits for ABI shareholders now," said Canaccord Genuity analysts.

The new group would combine AB InBev's Budweiser, Stella Artois and Corona lagers with SABMiller's Peroni, Grolsch and Pilsner Urquell. AB InBev would add certain Latin American and Asian breweries to its already large presence and, crucially, enter Africa for the first time.

Africa is expected to see a sharp jump in the legal drinking age population in coming years and a fast-growing middle class more willing to switch to lagers and ales from illegal brews.

For many observers this would be the final chapter of decades of consolidation in brewing. The big four, AB InBev, SABMiller, Heineken and Carlsberg, are already present across the globe and brewing more than half of the world's beer.