Top brewers AB InBev, SABMiller agree mega tie-up valued at $109B

“The Board of SABMiller has indicated to AB InBev that it would be prepared unanimously to recommend the all-cash offer of GBP 44.00 per SABMiller share to SABMiller shareholders, subject to their fiduciary duties and satisfactory resolution of the other terms and conditions”. The brewer turned down at least four previous offers from AB InBev – its first approach was worth £38 ($58) a share. SABMiller owns Miller Lite, Peroni, Castle Lager and Foster’s, as well as an extensive soft drink bottling business in 14 countries.

SABMiller shares were up 9.3 per cent at 39.60 pounds by 1405 GMT, when AB InBev’s share price was up 1.8 per cent at 100.10 euros.

If the merger deal is formally agreed, then the combined company will control a few 31 percent of beer sales around the globe.

There are significant anti-trust hurdles to any combination, particularly in the United States, where the companies would have about 70 per cent of the beer market.

InBev shares opened Tuesday trading in New York up $1.88, or 1.7%, at $113.37 US, in a 52-week trading range of $102.21 U.S.to $129.24 U.S.

Molson Coors would be the “assumed buyer” of that SABMiller stake, said Aldo Madrigrano, owner of Sussex-based Beer Capitol Distributing Inc., a wholesaler that includes MillerCoors brands in its portfolio. That’s because as younger drinkers turn in ever greater numbers to independent breweries, the two global market leaders have been trying to defend their market share.

AB InBev has a history of making acquisitions and will be looking to find cost savings from the deal as well as more clout with suppliers.

The world’s biggest brewer Anheuser-Busch InBev toasted Tuesday a $122-billion deal to swallow British rival SABMiller, targeting Africa and China and aiming to serve one in three beers globally.

“AB InBev’s brands are largely concentrated in the Americas and Europe; SABMIller has about 40 brands in Africa”.

In London, SABMiller was the biggest gainer in the top flight – up 304.5p to 3926p – as it finally edged closer to a mega-merger with Belgium-based Budweiser brewer AB InBev.

The deal would also face intense scrutiny from regulators given the dominant position of the two companies in the business.

Tom Russo, of Gardner Russo & Gardner, which holds stakes in both brewers, each worth about $650m, said “AB InBev would have been penny-wise and pound-foolish to not have come forward with a price that could get the job done”.

SABMiller employs 69,000 people in more than 80 countries.

The Guardian reported, “If completed, the takeover will secure AB InBev a target it has always been eyeing. AB InBev also learnt that Altria and BevCo would be receptive to an offer, he said”.