SABMiller agrees to takeover by AB InBev

The world’s two largest beer makers have struck a £68bn deal to combine, in what would rank as the third-biggest takeover in history.

UK-listed brewer SABMiller said it had agreed “in principle” to an acquisition by its larger rival Anheuser-Busch InBev, accelerating the pace of frenzied corporate deal making.

If completed, the deal – including debt – would be the third-largest M&A transaction in history, according to Dealogic, overtaking AOL’s purchase of Time Warner in 2000.

SAB’s largest South African investor, Public Investment Corp, said it was “critical” that the merged group be listed in Johannesburg.

The breakthrough after a month-long pursuit will further boost the bulging volume of deals in 2015 which is already on pace to surpass the record set just before the financial crisis.

The enthusiasm for mergers and acquisitions has been fuelled by cheap debt and a hunt for growth among the world’s biggest companies.

The combination would create a brewer responsible for one in every three beers sold globally and would require several knock-on deals as the two shed assets, from the US to China, to win regulatory approval.

The agreement followed a frantic day of negotiations in London on Monday between Jan du Plessis, the South African chairman of SAB, and Carlos Brito, the Brazilian chief executive of AB InBev.

With du Plessis holding out for more money and Brito refusing, a deal was clinched only after Olivier Goudet, chairman of AB InBev, intervened and said his company would raise its cash offer for a fifth time to £44 a share.

The figure — a 50 per cent premium to SAB’s undisturbed share price a month ago — was enough to sway du Plessis and Alejandro Santo Domingo , who was also involved in the final discussions and whose family is SAB’s second-largest shareholder.

Du Plessis said the support of the Santo Domingos was “critical” to a deal. “I have the utmost admiration for the way they have behaved. They are real gentlemen,” he said.

The final AB InBev proposal values SAB’s equity at £68bn and amounts to £75bn including net debt. The bid includes a partial share offer for 41 per cent of SAB’s stock, which is worth £39.03 a share.