AB InBev agreed to pay a fee of US$3 billion if it fails to get approval from regulators and shareholders for the purchase.
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Mr Forsyth added: “This means that growth for mainstream beer players is now about a strong presence in emerging markets where there is still a huge and growing demand for more mainstream, affordably priced beer brands”.
While common shareholders will be paid out the $67.59 per share, SABMiller’s two biggest investors, Altria (MO – Analyst Report) and the Santo Domingo family from Columbia, will be offered a cash and shares alternative worth about $60 per share.
Crucially for AB InBev, a deal would allow it to venture out more into the African and Australian markets where its might has yet to be felt in the way it is in Europe, North Africa and Asia.
The beery behemoth will have global sales of $55 billion and boast 18 of the world’s most popular brews. Combining the two will shake up the global beer market, giving the company control of a third of the market.
Also in the AB InBev portfolio is craft brewer Blue Point Brewing Co.
SABMiller said it has indicated to AB InBev that its board would be prepared to accept the offer and said it had asked for a two-week extension to the deadline set for its rival to announce a firm intention to bid.
“There’s so much we don’t know, we don’t know what costs they’ll take out, we don’t know what they’ll get for the asset sales that they’ll have to make”, said Morningstar analyst Phil Gorham. The most obvious candidate for divestment is SABMiller’s 58% stake in the MillerCoors joint venture in the U.S., where AB InBev is already clear market leader. AB InBev’s share price rose 1.7 percent to 100 euros in Brussels. “It is just another reason to drink local craft beer”. SAB employs 6,400 in the country, and contributed £790m in taxes to the country’s economy a year ago. SABMiller, which is based in London, is the maker of rival brand Miller Genuine Draft, along with other names like Peroni and Milwaukee’s Best.
AB InBev turned to Lazard for financial advice and its corporate broker Deutsche Bank AG, as well as lawyers from Freshfields Bruckhaus Deringer and Cravath Swaine & Moore.
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The new company is expected to be based in Belgium, home to AB InBev’s current headquarters, where there is a beer tradition dating back to the Middle Ages. “Micro brewers and their highly differentiated cask ales also continue to make progress”. Craft brewers allege that as their market share grows, AB InBev is trying to hobble them by purchasing beer distributors, which creates a barrier between brewer and market that no amount of hopping-dry or otherwise-can overcome.
