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Anheuser-Busch Inbev mulling US$106bn for SABMiller

Last updated: 09:17 28 Sep 2015 EDT, First published: 07:17 28 Sep 2015 EDT

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Ignoring the trend for craft ales, the pair look set to double-down their bet on mass-produced lagers

Budweiser brewer Anheuser-Busch InBev (ABI) is tipped to offer US$106bn for rival SABMiller (LON:SAB) soon in the latest consolidation move in the global beer industry.

The two brewers have begun talks and SABMiller, which makes Peroni lager, is said to be "not unreceptive" to a deal, the UK national newspaper The Sunday Times cited sources as saying.

Earlier this month, SABMiller said ABI (NYSE:BUD) had told it that it planned to make a proposal to acquire the company. Both companies declined to comment.

ABI needs to make a bid or walk away by a so-called "put-up-or-shut-up" deadline of 17.00 on October 14.

If a deal went through, it is said to be likely to represent the sixth largest in corporate history and could result in a company brewing about a third of the world's beer.

ABI is believed to have been interested in SABMiller for more than a decade, although there has been speculation that SABMiller could still buy a rival to fend off a bid.

In September, Dutch brewer Heineken rejected a takeover offer from SABMiller.

ABI is thought to want to buy SABMiller to boost its presence in Asia-Pacific, in particular China. A merged group is said to be likely to be worth about US$275bn.

Analysts say the deal is also attractive to ABI because it is struggling to expand by making more beer itself.

Financial data group Markit said ABI may have to rebase its dividend to fund an acquisition of SABMiller.

Broker Canaccord Genuity said the deal could trigger competition concerns as the pair have a combined volume market share in China of 41%, but remedies could be found.

It has been reported that ABI might have to offload its Molson Coors joint venture in the US.

As well as Budweiser, Belgium's ABI - the world's biggest brewer - makes Stella Artois and Corona.

UK-based SABMiller - which holds second position - also owns Grolsch and Pilsner Urquell.

ABI employs about 1,000 people at its UK breweries in Magor, Samlesbury and Mortlake, as well as its company headquarters in Luton. It has at least 200 beer brands.

The company was created in 2004 when Brazil’s biggest brewer Ambev bought Belgium’s Interbrew.

The merged firm later bought Budweiser owner Anheuser-Busch in 2008 for £33bn.

SABMiller has about 69,000 staff in more than 80 countries, from Australia, Zambia and Colombia to the Czech Republic, South Africa and the US, also producing more than 200 beers.

Formerly known as South African Breweries, SAB acquired US rival Miller Brewing Company in 2002, resulting in the renaming of the group as SABMiller.

A merged group would be worth about £177bn and would add ABI's dominance of Latin America to SABMiller's strong presence in Africa, as well as their breweries in Asia.

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