Brewers prepare for £177bn tie-up

A £177bn tie-up between the world’s two largest brewers is likely to be announced as early as this week. Budweiser maker AB InBev is set to offer some £70bn to take over Peroni giant SABMiller.

The deal, which would bring Stella Artois, Grolsch and Foster’s under the same roof, would be the largest takeover of a UK firm in the history of the London Stock Exchange.

An approach from Belgium’s AB InBev was announced two weeks ago, and the pair have been in talks since. SAB, which was initially cooler over the talks, has been pushing for a high price, according to reports.

But relations between the two have warmed, and it is likely that a deal could be announced i n the l ater stages of this week.

Analysts have suggested that AB InBev may be forced to offer up to 4500p a share to get an agreement.

SAB’s shares last week closed at 3588p, valuing the brewer at £ 58bn. InBev faces a deadline of October 14 to make an offer or walk away for six months.

The Belgian giant is keen to get access to SAB’s stable of fast-growing African businesses, but any deal would require major scrutiny by competition authorities across a host of countries.

China could be key to the merger, because the pair would have 38pc control of the lucrative market if combined. SAB generates 7pc of its annual revenues from China – it owns a 49pc stake in China’s biggest brewer CR Snow – while AB InBev generates 8pc of sales through its operations there.

The importance of the People’s Republic to the deal has been spelt out in a new report by research firm Bryan Garnier. It states: ‘We assume that AB InBev is successful in its bid for SABMiller. If it was allowed to merge i ts operations with those of CR Snow then it creates a market leader with 38pc, which would become very profitable and force others in the industry to react.’

Consolidation has been rife among the brewers and a tie-up between the two largest players has been long expected. If approved, the deal would be the sixthlargest in corporate history and create a brewer responsible for a third of all the beer made globally.

Any bid would trigger the attention of competition authorities, especially in America where both have a strong presence.

It is likely that both firms would have to make a string of disposals to get any deal waved through by regulators. Analysts expects SAB to be forced to offload the Miller Coors business, which produces the Coors Light lager and has 30pc of the US beer market.

SAB has a 58pc stake in the venture, and could offload this to its business partner Molson Coors.

SAB and AB InBev refused to comment last night.