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World's top brewers eye tie-up

Published:Wednesday | September 16, 2015 | 10:38 AMAP

The world's two biggest brewers could be joining forces after Anheuser-Busch InBev, the maker of Budweiser and Corona, said Wednesday it has made a takeover approach to SABMiller Plc, the owner of Miller Genuine Draft and Peroni.

While no specific offer has yet been made, stock in SABMiller rocketed 22 per cent higher on the news. That indicates investors expect the deal to value the company at around US$90 billion. Shares of AB InBev rose seven per cent.

The combined company would have a market capitalisation of some US$275 billion and be by far the largest brewer in the world. That could potentially draw objections from regulators worried the deal might stifle competition and lead to higher prices for consumers.

"AB InBev's intention is to work with SABMiller's Board towards a recommended transaction," the Leuven, Belgium-based company said in a statement. "There can be no certainty that this approach will result in an offer or agreement, or as to the terms of any such agreement."

The beer industry has seen years of consolidation as brewers seek to sustain growth amid changing tastes that have seen consumers gravitate towards craft beers and wine. AB InBev and SABMiller are themselves products of this combining trend.

SABMiller became the world's second-biggest brewer in 2002, when South African Breweries took over Miller Brewing Company, based in Milwaukee, Wisconsin.

Buying SABMiller would strengthen AB InBev's position in fast-growing economies in Africa and Asia. SAB Miller employs about 69,000 people in more than 80 countries, from Australia to Zambia, Colombia and the Czech Republic.

The company, now based in London, said Wednesday that it "would review and respond as appropriate to any proposal which might be made."

AB InBev was created in 2008 when Brazilian-Belgian brewer InBev bought US icon Anheuser Busch. The company has operations in 25 countries and makes more than 200 beers, including Stella Artois and Beck's.

SABMiller sold 324 million hectoliters (8.56 billion gallons) of lager, soft drinks and other alcoholic beverages in the year ended March 31, generating group net producer revenue of US$26.2 billion. AB InBev, by contrast, sold 459 million hectoliters and had revenue of US$47.06 billion.

Under United Kingdom takeover rules, AB InBev has until 5 p.m. on October 14 to make an offer for SABMiller or walk away.