SABMiller agrees takeover bid from AB InBev
The long anticipated AB InBev takeover of rival SABMiller looks to finally be going ahead after the two companies announced that they had reached an agreement in principle.
AB InBev increased its offer of £44 a share, which equates to around £70bn and, if successful, will result in the world’s largest brewer.
In a joint statement the boards of the world’s biggest two beer firms said they had “reached agreement in principle on the key terms of a possible recommended offer”.
The news comes one day before AB InBev’s deadline in which it had to make a formal bid for SABMiller or walk away from the deal. The merger had begun to look unlikely after SABMiller rejected a series of previous offers which it claimed "very substantially" undervalued the company.
The two companies have not yet formally finalised the terms of the deal, but the latest development means they have extended the City deadline for a firm offer until 28 October.
The Peroni and Grolsch brewer will now recommend to its shareholders the all-cash offer of £44 per share which represents a premium of about 50 per cent more than its share price in mid-September, before AB InBev’s takeover bid started.
AB InBev and SAB Miller adopt contrasting marketing approaches in the promotion of their beer and so a merger between the two would undoubtedly have consequences for the discipline. AB InBev runs big-budget national campaigns for most of its brands like Budweiser while SAB Miller’s marketing for Peroni uses a more nuanced approach which pushes a more premium perception of the brand.
The terms of the takeover will result in one of the top five deals in corporate history, and will create a brewing empire that will produce almost one-third of the world’s beer.