SABMiller Plc. to become part of the world largest brewer

One of the world’s largest brewer, SABMiller Plc. on Wednesday, announced that it had received a takeover offer from the world’s largest brewer Anheuser-Busch InBev NV. The deal is likely to increase the market capitalization of SABMiller to an excess of $75 billion and could create a brewing giant that will dominate the global beer market.

Top 10 beer companies globally 2014

Belgium’s AB InBev is the world’s biggest brewer and maker of Budweiser, Stella Artois and Corona, while SABMiller makers of Peroni, Grolsch and Pilsner Urquell beers is the world’s second brewer in terms of sales.

The announcement of the takeover led to an increase in the share price of SABMiller in the London Stock Market by 23 percent. Although no deal has been signed but SABMiller said, it is ready to accept and review all proposals.

According to Reuters, based on current price, the merger of ABInBev and SABMiller would have a market value of around $270 billion.

There are regulatory hurdles to be cleared before this deal can take place. SABMiller will have to let go of it stake in Miller Coors in the U.S. and its 49 percent stake in CR Snow in China an analysts at Bernstein told CNBC.

Fitch, the rating agency, noted that an AB InBev-SABMiller merger would create a global player, thus further widening the gap with rivals Heineken and Carlsberg. It would be exposed to high growth and profitable markets and would require only limited divestments in relation to market overlaps, financial times said.

This merger would be more enticing for AB InBev than for SABMiller since SABMiller is its major competitor. The merger would also be beneficial for both companies in the emerging market such as Africa where SABMiller already has a foothold.

SABMiller is currently in about 15 African countries including Nigeria, South Africa, Tanzania, Ghana and Ethiopia. In Nigeria, it is among the top brewer and produce some of the cheapest quality beer and malt drinks such as Hero lager beer, Castle stout and Grand malt.

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