Anheuser-Busch InBev , the owner of Budweiser , Stella Artois and Corona, is poised to dramatically expand its stable of brands and become the dominant player in the global beer market after reaching an agreement to buy SABMiller , owner of Miller Lite, Peroni and Fosters, Tuesday morning.
After weeks of public negotiation AB InBev said SABMiller has agreed to a $67 a share takeover, valuing the London-based brewer at $106 billion, making for the biggest beer acquisition on record and one of the largest in corporate history.
Were the proposed deal to close it would create a combined company with revenues of $64 billion and EBITDA of $24 billion, surpassing Coca-Cola KO -2.44% in sales and roughly matching the revenues of Unilever and PepsiCo PEP -1.02%. Only Nestle and Procter & Gamble PG -1.37% would have significantly greater sales than the merged company in the consumer products space, AB InBev estimated in a presentation last week. A merger would also increase AB InBev’s exposure in emerging markets, particularly Africa, where gross domestic product is expected grow steadily in coming years.
“Given the largely complementary geographical footprints and brand portfolios of AB InBev and SABMiller, the combined group would have operations in virtually every major beer market, including key emerging regions with strong growth prospects such as Africa, Asia, and Central and South America,” the company said a week ago.
Since then, AB InBev has been able to get SABMiller to the negotiating table after a series of unsolicited bids were rejected.
AB InBev first disclosed it had approached SAB Miller about a merger in September. Initially, AB InBev offered $57 a share before making four bid increases in recent weeks, culminating in its Tuesday’s offer at $67. That price represents a 50% premium to SABMiller’s share price before reports of a possible merger emerged.
SABMiller shareholders also have the option of receiving some stock during the takeover. AB InBev said it would offer a partial share alternative to its cash proposal of 0.483969 unlisted shares and GBP 3.7788 in cash for each SABMiller share, equivalent to a value of GBP 39.03 per SABMiller share on Oct. 12, or a 33% premium.
Holy fuck...