AB InBev, SABMiller reach agreement in principle

BRUSSELS, Belgium —  The boards of Anheuser-Busch InBev and SABMiller plc have agreed in principle on the key terms of an offer by AB InBev to acquire rival brewer SABMiller.

The companies said early Tuesday that under an increased offer from AB InBev, SABMiller shareholders would receive £44.00 per share ($68.11 U.S.) in cash, with a partial share alternative available for about 41% of the SABMiller shares. The total deal value is about $106 billion.

The new offer represents a premium of about 50% to SABMiller’s closing share price on Sept. 14, the last business day prior to renewed speculation of a bid by AB InBev.

AB InBev has until Oct. 28 to make a formal offer to SABMiller. The board of SABMiller has indicated to AB InBev that it would be prepared unanimously to recommend the £44.00-per-share cash offer to SABMiller shareholders.

In connection with the planned offer, AB InBev is slated to agree to a reverse break fee of $3 billion to SABMiller if the transaction fails to close due to the failure to gain regulatory clearances or the approval of AB InBev shareholders.

Last week, SABMiller rejected a $104 billion deal to be acquired by AB InBev. That offer was for £42.15 ($64.60) per share, a 44% premium from the SABMiller’s closing share price on Sept. 14. SABMiller’s board said that offer undervalued the company.

A combined AB InBev-SABMiller would account for about a third of global beer production and about 70% of the U.S. market. Leading beer brands from Belgium-based AB InBev, the world’s largest brewer, include Budweiser, Corona, Stella Artois and Beck’s. London-based SABMiller has a brand roster that includes Miller Genuine Draft, Coor’s, Peroni, Foster’s and Milwaukee’s Best.