The world’s two largest brewers have agreed a £71bn tie-up, creating a new global drinks giant, reports The Telegraph.
Anheuser-Busch InBev, the maker of Budweiser and Stella Artois, made a formal offer for FTSE 100 beer giant SABMiller on Wednesday morning. The merger is one of the biggest deals in corporate history.
SAB investors will receive £44 in cash for each of their shares, making way for a merger that AB InBev estimates will create savings of $1.4bn (£0.9bn) in pre-tax costs each year.
Carlos Brito, AB InBev’s chief executive, said that the company was “excited about our agreement … to build the world’s first truly global brewer”.
“By pooling our resources, we would build one of the world’s leading consumer products companies, benefitting from the experience, commitment and drive of our combined global talent base.
“Our joint portfolio of complementary global and local brands would provide more choices for beer drinkers in new and existing markets around the world.”
It comes almost two months after SAB, the owner of Peroni and Foster’s, confirmed that Belgian-Brazilian AB InBev had made a bid approach for a deal that would be Britain’s biggest ever takeover.
The Takeover Panel, which regulates merger and acquisition activity in the UK, had already granted the brewers three extensions to the deadline for AB InBev to make a firm offer or walk away from SAB.
The latest deadline was set to expire on Wednesday at 5pm. The brewers struck an “agreement in principle” on the outline terms of the deal last month.
As part of the deal, American-Canadian brewer Molson Coors will purchase SAB’s 58pc stake in their joint venture.
SAB’s holding in MillerCoors is estimated to be worth at least $10bn. Given that US competition regulators are expected to demand that AB InBev sells the stake, the brewer has already been working on a deal with Molson Coors.
The formal offer is just one of the many hurdles facing AB InBev’s acquisition of SAB. It will also have to overcome likely competition concerns in China and elsewhere, as well as union and potential political opposition to the takeover in South Africa, where SAB was founded and remains a major employer.
SAB shareholders could also pose a threat. AB InBev’s offer for SAB comes in two parts: a £44 a share all-cash offer intended for most of SAB’s investors, and a mixture of unlisted AB InBev stock and a small amount of cash.
The share-and-cash offer has been designed specifically so that the FTSE 100 company’s two biggest shareholders, tobacco company Altria and Colombia’s Santo Domingo family, can avoid a huge tax bill.
On the day of the agreement in principle it was worth £39.03, but AB InBev stock has since rallied, taking the value of the unlisted stock and cash offer close to the £44 value of the all-cash offer.
Many funds cannot hold unlisted shares, and if the value of the stock-and-cash offer overtakes the all-cash portion, some investors may voice discontent.
