European drink stocks rally on AB InBev proposed takeover of SAB

LONDON (Reuters) - European food and beverage stocks rallied on Tuesday after SABMiller accepted a takeover proposal at the fifth time of asking from Anheuser-Busch InBev (ABI) .

The STOXX Europe 600 Food & Beverage Index <.SX3P> was up 1.5 percent, outperforming a 0.6 percent drop in the broader, pan-European STOXX 600 index <.STOXX>.

After repeated rebuttals from its next largest rival, AB InBev said it was willing in principle to pay 44 pounds in cash per SABMiller share, with a partial share alternative set at a discount and limited to 41 percent of the SABMiller shares.

SABMiller shares were up 9.1 percent at 39.51 pounds, while ABI shares advanced 4 percent. Rival Diageo rose 0.4 percent, Heineken gained 1.1 percent although Carlsberg edged down by 0.3 percent.

(Reporting by Sudip Kar-Gupta, editing by Louise Heavens)