Months of negotiating have led to this moment– 
AB InBev and SABMiller have finally finalized the details of their $106 billion deal.
The deal will create one of the world’s largest beer companies, so in order to gain the support of regulators, SABMiller is selling its stake in Miller Coors, which owns several popular beer brands such as Miller Lite.
Chad Bray of The New York Times had details of the deal:
The announcement came just before a deadline on Wednesday for Anheuser-Busch InBev to make what is considered a formal offer under British takeover rules. If it had missed the deadline, it would not have been allowed to make another approach for up to six months.
“We believe this combination will generate significant growth opportunities and create enhanced value to the benefit of all stakeholders,” Carlos Brito, the Anheuser-Busch InBev chief executive, said in a news release.
“By pooling our resources,” he added, “we would build one of the world’s leading consumer products companies, benefiting from the experience, commitment and drive of our combined global talent base.”
SABMiller’s board of directors is recommending that shareholders accept the deal, and the directors have agreed to vote their shares in favor of the transaction.
Anheuser-Busch InBev is offering to pay £44 in cash per share for SABMiller. That would be a premium of more than 50 percent on SABMiller’s closing price in mid-September, before Anheuser-Busch InBev’s approach was announced.
SABMiller’s two largest shareholders — the American tobacco giant Altria and the Santo Domingo family of Colombia — have agreed to support the deal and to accept a partial share alternative in which they would receive restricted shares and a smaller amount of cash at £41.85 a share, a discount to the cash price. That would allow them to avoid a huge tax bill from the sale of their holdings.
As a result, Anheuser-Busch InBev would probably pay £69.8 billion, or about $105.5 billion.
Paul Jarivs and Thomas Buckley of Bloomberg wrote about the massive loan AB InBev is seeking to finance the $106 billion deal:
The Belgian and Brazilian families that control AB InBev will see their ownership diluted from more than 50 percent to 34.5 percent, and will hold nine of 15 board seats. SABMiller’s two biggest shareholders, Altria Group Inc. and Colombia’s Santo Domingo family, will own 16.5 percent, according to the statement. Altria will have two board seats, the tobacco maker said in a statement. The merged company will be listed in Brussels, Mexico and Johannesburg.
AB InBev will finance the cash part of the transaction from existing resources and third-party debt. It lined up banks to raise $75 billion in financing, a record commercial loan, Allen & Overy Plc said. The law firm advised lenders including Banco Santander SA, Bank of America Corp., Bank of Tokyo-Mitsubishi UFJ Ltd., Barclays Plc, BNP Paribas SA and Deutsche Bank AG.
Saabira Chaudhuri of The Wall Street Journal explained how SABMiller has to sell its stake in MillerCoors in order for the deal to get regulatory approval:
Anheuser-Busch InBev NV on Wednesday said it had formally agreed to buy SABMiller PLC for £69.8 billion ($105.5 billion), a deal that creates a brewing behemoth that will sell roughly one in three beers world-wide.
As part of that deal, SABMiller has agreed to sell its 58% share in the MillerCoors LLC joint venture to its partner, Molson Coors Brewing Co., which holds the remaining stake, as well as the Miller portfolio outside the U.S. for $12 billion. The divestiture, which is contingent on the completion of AB InBev’s acquisition of SABMiller, would catapult Molson into the position of the No. 2 brewer in the U.S., with a 25% market share second only to AB InBev’s 45% share.
The sale of MillerCoors—which sells brands including Miller Lite, Miller High Life and Blue Moon—was widely expected, and is seen as necessary for AB InBev to gain U.S. regulatory approval to buy SABMiller.
Philip Blenkinsop and Martinne Geller of Reuters detailed the strategic advantage AB InBev will gain with the deal:
The merger will combine AB InBev’s Budweiser, Stella Artois and Corona brands with SABMiller’s Peroni, Grolsch and Pilsner Urquell and brew almost a third of the world’s beer, dwarfing rivals Heineken and Carlsberg.
Based on Tuesday’s closing share prices and current exchange rates, the offer is worth 70 billion pounds, or $106 billion.
The takeover, which SABMiller’s board provisionally accepted last month, would be the largest of a British-based company and the fourth-biggest overall of any corporation.
AB InBev is already the biggest player in the United States, Brazil and Mexico, three of the top four markets in terms of profits.
By buying SABMiller, it will add Latin American countries such as Colombia and Peru and crucially enter Africa at a time when some of its home markets, such as the United States, are weakening as drinkers shun mainstream lagers in favour of craft brews and cocktails.
Africa, where SAB operates in 16 countries, is expected to see a sharp rise in people of legal drinking age and has a fast-growing middle-class developing a taste for branded lagers and ales rather than the illicit brews traditionally drunk.
Beer consumption there will grow by more than anywhere else over the next five years, according to industry experts Plato Logic.
