ABInBev, SABMiller reach tentative $104-bn pact

Anheuser-Busch InBev and SABMiller said on Tuesday that they had reached an agreement in principle on the key terms of a deal in which Anheuser-Busch InBev would pay about $104 billion to acquire its smaller brewing rival. A merger would combine the world's two largest brewers, creating a behemoth with annual revenue of $64 billion that commands 30 per cent of global beer sales.

The agreement came ahead of a deadline on Wednesday for Anheuser-Busch InBev, the brewer of Budweiser and Stella Artois, to make what is considered a formal offer for SABMiller or to not make another approach for as long as six months, under British takeover rules.

The companies said they had asked for permission from British regulators to extend the deadline until October 28 to continue their talks. Under the terms of the latest proposal, Anheuser-Busch InBev is willing to pay £44, or about $67.64, a share for SABMiller. That is up from an offer of £43.50 a share in cash made on Monday and would represent a more than 50 per cent premium to SABMiller's closing price in mid-September before Anheuser-Busch InBev's approach was first announced.

The latest proposal also depends on SABMiller's two largest shareholders' accepting an alternative plan in which they would receive restricted shares and a smaller amount of cash at £39.03 a share, a discount to the cash price. Under that proposal, they would receive 0.483969 of a restricted share and £3.78 a share in cash for each share they hold in SABMiller.

As a result, Anheuser-Busch InBev would probably pay £67.9 billion, or about $104 billion. "The board of SABMiller has indicated to AB InBev that it would be prepared unanimously to recommend the all-cash offer of £44.00 per SABMiller share to SABMiller shareholders, subject to their fiduciary duties and satisfactory resolution of the other terms and conditions of the possible offer," the companies said in a news release on Tuesday, referring to Great Britain pounds. Any deal between the brewing giants would most likely face significant regulatory scrutiny and require some asset sales, most likely in the United States and China.

As part of the latest proposal, Anheuser-Busch InBev would agree to pay a $3-billion fee to SABMiller in the event that the deal failed to receive regulatory approval, the companies said. The agreement in principle on a deal followed nearly a month of discussions between the companies, in which Anheuser-Busch made four prior takeover bids and SABMiller repeatedly rejecting its suitor's proposals as substantially undervaluing the company.

©2015 The New York Times News Service