The world’s top brewer Anheuser-Busch InBev clinched Wednesday a gigantic formal $121-billion deal for its nearest rival SABMiller, in the third biggest takeover in global corporate history.
The blockbuster transaction, worth the equivalent of 112 billion euros including debt, will bring together InBev’s top lagers like Beck’s, Budweiser and Stella Artois, with SABMiller brands Foster’s, Grolsch and Peroni.
Belgian-Brazilian behemoth InBev is eager to tap into booming developing markets in Africa and China, where SABMiller’s joint venture produces Snow — the world’s best selling beer by volume.
InBev will pay £44 per share in cash for SABMiller, which has also agreed to sell its 58-percent stake in US unit MillerCoors for $12 billion to Molson Coors to help win regulatory approval, its said in a joint statement.
“The boards of Anheuser-Busch InBev and SABMiller are pleased to announce that they have reached agreement on the terms of a recommended acquisition of the entire issued and to be issued share capital of SABMiller by AB InBev,” the pair said.
The transaction is set to complete in the second half of 2016, subject to shareholder and regulatory approvals — otherwise InBev will face a $3-billion break fee.
The agreement marks the world’s third biggest takeover in corporate history, according to financial information provider Dealogic, and is also the largest ever takeover of a British company.
InBev, which also brews Hoegaarden and Leffe beers, added that the takeover will “strengthen AB InBev’s position in key emerging regions with strong growth prospects such as Asia, Central and South America, and Africa”.
The transaction will also “create a truly global brewer, drawing on a similar heritage and shared passion for brewing and commitment to quality”, it said.
The group will target annual efficiency savings of “at least” $1.4 billion by the end of the fourth year following completion, sparking fears of job losses.
“We believe this combination will generate significant growth opportunities and create enhanced value to the benefit of all stakeholders,†said AB InBev chief executive Carlos Brito in the statement.
“It has long been our dream to build the best beer company bringing people together for a better world and we believe this combination represents a step change for our business and our journey towards that goal.”
SABMiller chairman Jan du Plessis added that the British group benefited from its presence across the developing world — and the takeover price had won the board’s unanimous backing.
“SABMiller has an unmatched footprint in fast-growing developing markets, underpinned by our portfolio of iconic national and global brands,” du Plessis said.
“However, AB InBev’s offer represents an attractive premium and cash return for our shareholders, and secures earlier delivery of our long-term value potential, which is why the board of SABMiller has unanimously recommended AB InBev’s offer.”
The two brewing giants had already agreed in principle last month on the £44-per-share deal.
The pair added on Wednesday that the sale of SABMiller’s holding in US business MillerCoors, which makes Coors Light, was designed to “promptly and proactively address regulatory considerations”.
The brewing industry meanwhile faces pressure to consolidate amid increasing demand for so-called craft beers that are brewed by smaller independent firms.
In morning London deals, SABMiller’s share price rallied 2.41 percent to £40.72 on the British capital’s rising FTSE 100 index. AB InBev shares added 0.72 percent to 112 euros in trading in Brussels.