Budweiser’s parent AB InBev raises offer for SABMiller

Beer brewers Anheuser-Busch InBev and SABMiller said Tuesday they have agreed “in principle” on the terms of the Belgian-headquartered firm’s offer for the British-South African company.

The new group would brew nearly a third of the world’s beer, combining AB InBev’s Budweiser, Stella Artois and Corona lagers with SABMiller’s Peroni, Grolsch and Pilsner Urquell. Altria, a U.S.-based cigarette maker, had been pushing SABMiller’s board to make a deal with AB InBev.

The company confirmed the improved offer Monday and said it hopes the two sides can reach an agreement to “build the first truly global beer company”.

SABMiller added that its board “would be prepared unanimously to recommend the all-cash offer of £44.00 per SABMiller share” to its shareholders.

“We think that this is good value for SAB”, said Alicia Forry, an analyst at Canaccord Genuity.

RBC Capital Market’s managing director of consumer research, James Edwardes Jones said: “SABMiller’s board, it is now apparent, has negotiated very effectively rather than frustrating its shareholders by clinging onto its independence”.

The tie-up between the two companies will be reviewed by competition authorities in the United States and China, where SABMiller operates joint ventures with local partners.

The PSA comprises up to 326 million shares, which will be available for approximately 41% of the SABMiller shares.

The United Kingdom brewer spurned previous proposals, including one AB InBev made public on October. 7 that valued the company at about 65.2 billion pounds. This proposal was an offer of cash, with an alternative that would allow investors to accept shares in AB Inbev instead, up to 42% or the value of the total transaction.

Yet Alejandro Santo Domingo, the Harvard-educated fixture of New York high society, is according to media reports well-acquainted with AB InBev’s controlling shareholders, including Brazilian billionaire Jorge Paulo Lemann. The company has set a cost-savings goal of $1.05 billion by 2020 – up from its initial goal of cutting out $500 million inside of three years.

The owners of Budweiser, Anheuser-Busch InBev, want to buy SABMiller, their closest global rival, in a deal that would leave the world No. 3, Heineken, in the dust. Since Wednesday, Altria has publicly criticized SABMiller’s rejection of the deal, and AB InBev claims to have BevCo’s support as well.