Beer-brewing colossus SABMiller (SAB) froths up another 2.8% to £40.87 as the board unanimously recommends and agrees the terms of a titanic £71 billion takeover offer from AB Inbev (BUD:NYSE). Furthermore, Budweiser-making rival AB Inbev has speedily inked a deal to divest the target's US assets, though the fact SABMiller's shares still trade below the improved offer price reflects a degree of uncertainty around regulatory hurdles left to clear.
Long-standing Shares favourite SABMiller, which grew from small beginnings brewing cold beer for thirsty miners in the dusty streets of 19th century Johannesburg into a global lager leviathan, is being taken over for £44 in cash in one of the largest mergers in corporate history.
The offer price represents a thirst-quenching 50% premium to the £29.34 share price before renewed bid speculation arose in September, while the transaction also includes a partial share alternative.
The takeover, which SABMiller provisionally accepted last month, would create a megabrewer with operations in virtually every major beer market, including high-growth emerging regions across Africa, Asia, and Central and South America. The merger would combine AB Inbev's Corona, Stella Artois and Budweiser brands with SABMiller's Grolsch, Peroni Nastro Azzurro and Pilsner Urquell brands, with the enlarged company brewing almost a third of the world's beer.
Commenting on the deal, Jan du Plessis, chairman of Tyskie-to-Snow maker SABMiller, says: 'SABMiller has an unmatched footprint in fast-growing developing markets, underpinned by our portfolio of iconic national and global brands. However, AB InBev's offer represents an attractive premium and cash return for our shareholders, and secures earlier delivery of our long-term value potential, which is why the Board of SABMiller has unanimously recommended AB InBev's offer.'
The pair's geographic footprints are largely complementary, but Carlos Brito-bossed AB InBev is moving quickly to address competition concerns. In order 'to promptly and proactively address regulatory considerations', it has speedily agreed to sell SABMiller's 58% interest in MillerCoors, the joint venture in the US and Puerto Rico, to Denver-based partner Molson Coors (TAP:NYSE) for $12 billion, a deal that includes the sale of the global Miller brand.