SABMiller surging as takeover fever rises

SHARES in Peroni maker SABMiller rose as much as 3pc on fevered speculation rival AB InBev was about to make a £70bn opening offer, writesRupertSteiner.

The two firms are understood to have held ‘friendly’ talks and, despite wrangling over price, are amenable to a deal.

This month Belgium-based AB InBev, the brewing giant behind Budweiser, made an approach for its Peroni-making rival to form a £177bn beer behemoth.

AB InBev (ABI), which is already the world’s largest brewer, said it wanted to agree a takeover with the number two player, which has a £60bn market value.

The shares rose 46.5p to 3634.5p yesterday but analysts said any deal should be priced above £42.

James Edwardes Jones, an analyst at RBC Capital Markets, said: ‘We have great respect for ABI’s management and – if the price demanded by SAB is too rich – would like to think they will have the financial discipline to walk away. But it wouldn’t be easy.’

He suggested a fair price would be £42, which is 6pc higher than his original suggestion of £39.50.

The deal would not make commercial sense if the price was higher than that, he added.

If approved, the deal would be the sixth largest in corporate history and create a brewer responsible for a third of all the beer made globally.

Consolidation has been rife among the brewers and a tie-up between the two largest players has been long expected.

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

It is likely both firms would have to make disposals to get any deal waved through by regulators.

China could be key to the merger, giving the pair 38pc control of the lucrative market. SAB generates 7pc of its annual revenues from China – it owns a 49pc stake in China’s biggest brewer CR Snow ( pictured) – while AB InBev generates 8pc of sales there.

A report by research firm Bryan, Garnier said: ‘If it was allowed to merge its operations with those of CR Snow, it creates a market leader with 38pc, which would become very profitable and force others in the industry to react.’

Under Takeover Panel rules, AB InBev has until October 14 to table a formal bid but one could come this week.