AB InBev and SABMiller agree new $104b takeover proposal

An employee wheels a trolley of SABMiller Plc Castle beer at a store in Durban, South Africa, on Monday. [Photo/China Daily]

Anheuser-Busch InBev NV has agreed to buy SABMiller Plc for about 68 billion pounds ($104 billion), raising its bid after several rejections, to clinch a record industry deal that will bring one out of every three beers sold worldwide under a single company.

The Budweiser maker will pay 44 pounds a share in cash for a majority of the shares in its nearest competitor, the companies said in a statement on Tuesday, gaining brands such as Peroni and Grolsch and giving it control of about half the industry's profit.

The price is 50 percent above SABMiller's closing value on Sept 14, the day before speculation of a deal surfaced.

"We think that this is good value for SAB," said Alicia Forry, an analyst at the Toronto-based financial services firm Canaccord Genuity. "It's great that they've come to a point where the valuation is agreed, and we expect ABI in due course to make a firm offer."

After years of speculation, the deal has been hastened by the impact of slowing economies in the emerging markets of China and Brazil.

A 20 percent drop in SABMiller shares in the months preceding AB InBev's approach and the prospects of an end to cheap credit also served as a catalyst to a takeover.

The agreement, which is tentative, caps more than two weeks of back-and-forth negotiations over price. SABMiller said its board is prepared to recommend it.

Under the United Kingdom takeover rules, AB InBev has until Wednesday to make a formal offer, but the companies have agreed to seek an extension of that by two weeks, to Oct 28, to have time to formalize the agreement.

AB InBev agreed to pay a fee of $3 billion if it fails to get approval from regulators and shareholders for the purchase. The new company will be incorporated in Belgium.

SABMiller's two largest shareholders, Altria Group Inc and Bevco Ltd, can receive cash and stock valued at 39.03 pounds a share for their stakes, which account for 41 percent of the company. They will not be able to sell the shares for five years, and will have the right to nominate directors.

SABMiller shares fell 1.3 percent to 3,621.50 pence in London on Monday. AB InBev was little changed at 98.35 euros in Brussels.

The UK brewer spurned previous proposals, including one AB InBev made public on Oct 7 that valued the company at about 65.2 billion pounds.

Together, AB InBev and SABMiller will be the world's largest consumer-staples company by earnings, according to Exane BNP Paribas analysts, who estimate the combined company will make $25 billion before interest, tax, depreciation and amortization in 2016. The enlarged brewer will have the number one or two positions in 24 of the world's 30 biggest beer markets, they estimate.