Belgium's Anheuser-Busch InBev NV has made a formal $107 billion offer for the UK-based SABMiller in a deal to combine the world's two largest brewers that together sell almost one in three beer bottles around the world.
The acquisition will be the third-biggest takeover in global corporate history and create a company with annual revenue of about $64 billion.
The takeover was sealed after Denver-based Molson Coors agreed to buy SABMiller's 58 per cent stake in their joint venture, called MillerCoors, in a deal valued at $12 billion in cash, to help win regulatory approval.
As per the deal, AB InBev will pay £44 a share in cash for smaller rival SABMiller, along with a discounted alternative of mostly shares for SABMiller's two largest shareholders – US tobacco giant Altria Group Inc and Colombia’s Santo Domingo family – who together own 40.5 per cent of the target company.
The agreement came after weeks of discussions since September with SABMiller rejecting several previous offers from AB InBev before accepting the deal. The two firms had previously extended the deadline for a formal offer twice after reaching an agreement on October 13.
The transaction is set to complete in the second half of 2016, subject to shareholder and regulatory approvals. AB InBev said it would seek a
secondary listing and regional headquarters in Johannesburg.
"We believe this combination will generate significant growth opportunities and create enhanced value to the benefit of all stakeholders," said AB InBev chief Carlos Brito in the statement.
AB InBev expects to save $1.4 billion annually four years after the deal completes
AB InBev expects to save $1.4 billion annually four years after the deal completes.
SABMiller employs 69,000 people in more than 80 countries. The proposed merger would bring some of the world’s most popular beers under one roof, including Budweiser, Corona and Stella Artois from AB InBev, and Miller Lite, Peroni Nastro Azzurro and Grolsch from SABMiller.
AB InBev has 155,000 employees in 25 countries. The company is listed in Brussels and New York. The deal would help it get a bigger play in emerging markets, especially Africa, as also markets like India.
In the year ended March 31, 2015, SABMiller sold 324 million hectolitre of lager, soft drinks and other alcoholic beverages. It generated group net producer revenue of $26.28 billion and earnings before interest, tax and amortization of $6.3 billion.
It is the second-largest beer maker in India and is better known for selling under brands such as Foster's, Haywards 5000, Knockout and Royal Challenge.
The third-biggest brewer globally is Heineken, which recently hiked its stake in India's top beer maker United Breweries that sells Kingfisher beer.
AB InBev's lead advisers are investment bank Lazard and law firm Freshfields Bruckhaus Deringer. SABMiller is being advised by Robey Warshaw, JP Morgan and Morgan Stanley and law firm Linklaters.