Anheuser-Busch InBev and SABMiller announced on Tuesday that they have agreed in principle on the merger deal in which Anheuser-Busch InBev would pay about $104 billion to acquire its main competitor in the brewing market.
For over a month, Belgium's Anheiser-Busch InBev had been trying to acquire South Africa-based SABMiller, its brewing rival. Its previous offers were repeatedly rejected.
A merger would combine the world's two biggest beer brewers, creating a cyclopean with annual revenue of $64 billion that commands 30 percent of global beer sales.
The agreement was announced ahead of a deadline on Wednesday for Anheuser-Busch InBev to make what is considered a formal offer for SABMiller or to not make another approach for as long as six months, according to the British takeover rules.
The companies said they had requested for permission from British regulators to extend the deadline until Oct. 28 to proceed with their talks.
Under the terms of the deal, Anheuser-Busch InBev agreed to pay 44 pounds, or about $67.64, a share for SABMiller, the companies said in a statement. That is an increase from an offer of £43.50 a share in cash made on Monday and would represent a more than 50 percent premium to SABMiller’s closing price in mid-September before Anheuser-Busch InBev’s approach was first announced.
The merger deal also depends on SABMiller’s two biggest shareholders, cigarette-maker Altria and the BevCo company of Colombia's Santo Domingo family agreeing to an alternative plan in which they would receive restricted shares and a smaller amount of cash at £39.03 a share, a discount to the cash price. Under that proposal, they would receive 0.483969 of a restricted share and £3.78 a share in cash for each share they hold in SABMiller.
Hence, the brewer of Budweiser and Stella Artois, Anheuser-Busch InBev would possibly pay £67.9 billion, or about $104 billion.
The deal between the brewing giants will most likely come under regulatory scrutiny and require some asset sales, mostly in the United States and China.
In the event that the deal failed to receive regulatory approval, Anheuser-Busch InBev will have to pay a $3 billion fee to SABMiller, the companies said.
The deal would be the largest takeover of a UK company and would rank in the top five mergers in corporate history. The combined company would brew almost a third of the world's beer, which includes AB InBev's Budweiser, Stella Artois and Corona lagers along with SABMiller's Peroni, Grolsch and Pilsner Urquell.