AB Inbev and SABMiller seal the deal

The two biggest brewers in the world will merge as the terms of SABMiller’s £71 billion buyout by AB Inbev have been agreed, with the new beer giant to be named Newco.

Budweiser brewer AB Inbev is expected to complete the takeover of SABMiller by late 2016 (Photo: AB Inbev)

The record-breaking deal, which stands to be one of the biggest takeovers in corporate history, was confirmed just hours before the companies’ third extended deadline lapsed on 11 November.

The takeover of London-based SABMiller – producer of the Miller, Coors and Peroni beer brands – by Belgium’s AB Inbev is expected to be completed in the second half of 2016.

Newco will be one of the largest consumer product companies in the world. It will totally dominate the global beer market, controlling around one-third of the world’s beer sales by volume even after brands are offloaded to secure regulatory approval.

“We are excited about our agreement on the terms of a recommended acquisition of SABMiller to build the world’s first truly global brewer,” said Carlos Brito, CEO of AB Inbev, producer of the Budwieser, Bud Light and Stella Artois brands.

SABMiller CEO Alan Clarke said: “I am sure the next chapter will bring new opportunities for exceptional success.”

SABMiller has also confirmed it is to sell off its stake in US joint venture MillerCoors to ensure the new company secures approval from competition authorities in the country.

Molson Coors, with whom SAB has the joint operation, is reportedly nearing a deal to buy out its partner’s 58% share for around $12 billion (£7.9bn). SAB Miller is expected to confirm details of its MillerCoors sell-off soon.

“I am sure the next chapter will bring new opportunities for exceptional success,” said SABMiller CEO Alan Clarke.

The takeover is expected to create a pre-tax revenue surplus of £920 million per year by 2020 because of cost savings and efficiencies created by the tie-up.

It will “provide more choices for beer drinkers, including global and local brands, in new and existing markets around the world,” a statement from the two companies said.

Revealing their intention to put a big focus on emerging markets, where SABMiller has been performing better than the competition in recent years, the companies said: “The transaction would strengthen AB InBev’s position in key emerging regions with strong growth prospects such as Asia, Central and South America, and Africa.

“These regions have hugely attractive markets and will be critically important to the future success of the Combined Group.”

The new company will be leading producer in several key markets, according to Euromonitor International.

It will be the number one player in Australasia with 40% of the region’s 2 billion litre volumes, number one in the Middle East and Africa with 41% of the region’s 13 billion litre volumes, and number one in North and Latin America, with a staggering 45% and 61% of the two region’s markets respectively.