Top brewers AB InBev, SABMiller agree mega tie-up
(AFP) British brewer SABMiller announced Tuesday it had finally agreed a takeover by Anheuser-Busch InBev, the world's biggest beer producer -- for about $109 billion.
Including debt, the cost of buying SABMiller is around $117 billion (103 billion euros), making it the world's third biggest takeover after two mega mergers across the telecoms sector.
Belgian-Brazilian group AB InBev, the maker of Budweiser and Stella Artois lagers, struck a deal with the producer of Foster's and Grolsch at the fifth time of asking.
Shares in SABMiller, the world's second-largest brewer, surged on the announcement, with markets expecting a deal to go through despite regulatory hurdles.
"The boards of AB InBev and SABMiller announce that they have reached agreement in principle on the key terms of a possible recommended offer," the British group said in a statement.
SABMiller added that its board "would be prepared unanimously to recommend the all-cash offer of £44.00 per SABMiller share" to its shareholders.
AB InBev has until October 28 to make the bid formal.
Share price value
The terms of Tuesday's deal is meanwhile higher than a fourth bid tabled by AB InBev on Monday that was worth about £43.50 a share.
At £44 a share, the new all-cash offer is a premium of about 50 percent to SABMiller's closing share price on September 14, or final business day prior to renewed speculation of an approach by AB InBev.
While most companies' share prices were in the red Tuesday following weak Chinese data, SABMiller soared 8.56 percent to £39.31 and Budweiser maker AB InBev won 2.0 percent to 100.40 euros.
Connor Campbell, analyst at Spreadex trading group, noted that "any pact that would cause a single company to produce a third of the world's beer is going to come under intense, potentially deal-ending, scrutiny from regulators".
SABMiller, which also makes beers Peroni and Pilsner Urquell, claimed the previous bids had undervalued the company.
The brewing sector is looking at consolidation faced with the increased popularity of so-called craft beers that are brewed by smaller independent firms.
AB InBev recently reported a sharp fall in second quarter profits owing to weak economic conditions in several markets.
In order to firm up its business, SABMiller earlier this year bought London-based craft beer company Meantime for an undisclosed sum, as big players in a saturated beer market eye opportunities in the fast-growing segment.
Elsewhere, Dutch beer giant Heineken has bought half of US-based beer maker Lagunitas, hoping to cash in on the global rocketing popularity of craft beers.