SABMiller has accepted a £69 billion (€92 billion) takeover offer from Anheuser-Busch InBev, the world’s largest brewer. The merger is one of the top five mergers in history and will create a combine that will account for one third of global beer sales.
Two weeks of negotiations led to AB InBev presenting a fifth offer to SABMiller of £44 (€59) per share. SABMiller said it will recommend it to shareholders.
The companies have extended the deadline for an offer to October 28. If AB InBev does not get approval for the deal, it has agreed to pay $3 billion (€2.6 billion) to SABMiller. AB InBev must secure funding and is working with 10 banks to do so.
Anheuser-Busch InBev brands include Budweiser, Corona, Stella Artois and Becks. SABMiller brands include Fosters, Miller, Peroni, and Strongbow.
The deal would be the biggest in UK history, surpassing Royal Dutch Shell's £47 billion (€62 billion) takeover of BG Group earlier this year. The merger will see AB InBev account for almost half of the beer industry’s profits, and the largest sales of any consumer staples company.
In Association with
Stakeholders
Tobacco giant Altria Group Inc and Bevco Ltd are SABMillier’s biggest shareholders with a 41% stake. They will be able to receive cash and stock at £39 (€52) a share, which they will be unable to sell for five years.
Private equity firm 3G Capital has a stake in AB InBev, and the Brazilian investors have previously carried out successful takeovers of Heinz and Kraft Foods.
The deal is said to have been provisionally agreed upon due to slowing emerging markets and SABMiller’s shares dropping 20%. SABMiller has a large market share in Latin America, making it attractive to AB InBev.
Western Europe and North Africa beer sales have been in decline for two decades. The craft beer trend has seen a shift in consumer purchasing, with people choosing craft beers over traditional ones.
Both companies have attempted to tackle the craft beer competition. AB InBev purchased US breweries Goose Island and Eysian Brewing. SABMiller purchased London Meantime Brewing.
Competition Concern
AB InBev have spent around €90 billion on deals in the last 10 years, and the proposed takeover will face regulatory scrutiny around the world. The enlarged group would hold the number one or two spot in 2o out of 24 of the world's biggest beer markets.
The remaining global beer competitors of note are are Heineken and Carslberg, both run by family foundations.
According to Exane BNP Paribas analysts, the new company would make $25 billion before interest, tax and depreciation in 2016.
