New | AB InBev's deal to buy SABMiller likely to face regulatory scrutiny

At the sixth time of asking, British-based brewer SABMiller has accepted in principle a £69 billion (HK$813 billion) takeover offer from Anheuser Busch InBev that will create the world's biggest beer company and bring together top US brands Budweiser and Miller.

Having dismissed previous proposals over the past few weeks as undervaluing the company, the directors of SABMiller unanimously agreed to an offer that values each SABMiller share at £44, £6 more than its first offer almost a month ago. SABMiller's two biggest shareholders, Marlboro owner Altria and Colombia's BevCo, would get both cash and shares for their 41 per cent stake.

AB InBev, which owns Budweiser among a range of top-selling brands, has until October 28 to come up with a formal offer if British regulators grant an extension to the takeover talks. In that time, the two sides will work on the terms and conditions of the takeover offer as well as the financing of the deal.

If the merger deal is formally agreed on, the combined company will control some 31 per cent of beer sales around the globe. Given the size of the company, there are likely to be regulatory concerns, notably in the US and China as authorities worry about the impact on consumer choice and competition.

The markets think that the deal is now very likely and SABMiller's shares were trading right near the bid price. In midmorning trading in London, they were up 8.8 per cent at £39.42.

The two companies said yesterday the all-cash offer represented a premium of around 50 per cent to SABMiller's share price on September 14, the last trading day before renewed speculation of an approach from AB InBev emerged. For the cash and stock part, the premium is around 33 per cent.

According to yesterday's statements, AB InBev has agreed to pay US$3 billion to SABMiller if the deal fails to close because of failure to get regulatory approval or the clearance of AB InBev shareholders.