Anheuser-Busch InBev and SABMiller toast landmark beer deal

It’s thought that one factor that may have hastened the deal is the impact of the slowdown in emerging markets such as China – as did a weakening of SABMiller’s position.

SABMiller’ shares jumped 9.1% when the market opened in London.

Having dismissed previous proposals as undervaluing the company, the directors of SABMiller unanimously agreed to an offer that values each SABMiller share at 44 pounds.

Lombardi conceded the deal is “great” in terms of its scope for savings, but that he is “mindful of the challenges big brewers face”. “The alternative was devised for SABMiller’s two largest shareholders, Altria Group Inc. and the Santo Domingo family’s investment vehicle BevCo, and helps them with taxation and potential accounting issues”, according to The Wall Street Journal.

For AB InBev, a deal would allow it to bolster its presence in Africa and Australia, where it is not as dominant as it now is in Europe, North Africa and Asia.

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.

The merger will create a global beer giant worth more than £180bn. A-B InBev, which is based in Belgium, has roughly 155,000 workers around the world.

It’s time to pop open the champagne of beers, as the world’s two largest brewers celebrate a merger deal. A combined company would have total annual sales of US$73.3 billion. These shares would take the form of a separate class of AB InBev shares (‘Restricted Shares’). It took five attempts for AB InBev to reach a deal that has the backing of the entire SAB board, taking talks perilously close to a Takeover Panel deadline that was due to expire at 5pm today.

The “agreement in principle” between SAB and AB InBev has two elements.

The Miller line of beers in the U.S.is parked in a joint venture with Molson Coors in which SABMiller owns a 58 percent stake.

The two companies have not yet formally finalised the terms of the offer, but this development means they have extended the deadline for a firm offer by AB InBev until October 28.

If AB InBev can not get the green light from regulators for the deal or if its shareholders do not back the takeover, the brewer would have to pay SABMiller a break fee of three billion USA dollars (£2bn).

AB InBev is the biggest beer company in the world, making more than 200 types of beer including Corona, Beck’s and Leffe.

He said: “Some drinkers may find it hard to avoid these [chain] brands and they may find beers being provided by small independent brewers being pushed off the shelves in pubs and supermarkets by these companies”. Chinese authorities could require the brewer to exit SABMiller’s joint venture with China Resources Enterprise Ltd., which controls 23% of the market and produces the top-selling Snow brand.