UK-listed SABMiller has confirmed that the Belgian brewing giant, Anheuser-Busch InBev has contacted the company detailing its intent to acquire it. Although a formal proposal has not yet been received by SABMiller, if such a deal were to be completed, it would create a drinks giant with a market value of $207 billion based on current prices, according to Reuters.

 

In terms of sales, SABMiller is the world’s number two brewer with brands including Peroni, Grolsch, and Pilsner Urquell. Upon news of the overture by AB InBev, SABMiller shares climbed 23% in London, while AB InBev’s shares rose 7.4%. News of the potential deal even had an effect upon the broader European brewing industry with shares of Heineken and Carlsberg both rising 5%.

 

SABMiller shares are currently trading at £36 – at this rate, if AB InBev matched this share price in its bid, plus accounting for SABMiller’s net debt, a deal to merge the two companies would have a value of approximately $100 billion, making it one of the top ten acquisitions in recorded history.

 

The joining of the two companies would mean a global reach for the resulting entity as AB InBev has a strong share of the Latin American market, while SABMiller has a strong presence across Africa.

 

However, because of overlap within the two companies, any such deal will likely face stringent regulatory hurdles, with analysts at Bernstein believing that SABMiller will have to divest its stake in Miller Coor’s in the U.S., and its 49% stake in CR Snow in China.