Anheuser-Busch InBev moving closer to £69-bn SABMillier acquisition

The world's two biggest beer brewers inched closer to a merger deal yesterday with an announcement that they had agreed to a ''pact in principle''.

Last week SABMiller finally agreed to be acquired by its larger rival Anheuser-Busch InBev for nearly £69 billion in a record industry deal.

The move comes after three rejections, and will create a brewer accounting for a third of all global beer sales.

A successful merger would create the world's most powerful beer family including InBev's Budweiser, Corona and Stella Artois labels, and Miller High Life, Coors and Blue Moon, from SABMiller.

The agreement follows weeks of back-and-forth discussions and just before a deadline today that would have required Anheuser-Busch InBev to make what was considered a formal offer under UK takeover rules or refrain from making another approach for up to six months.

According to commentators, considering the size of the company, there are likely be regulatory concerns, notably in the US and mainland China as authorities are concerned about the impact on consumer choice and competition.

However, there are concerns in some quarter that though Anheuser-Busch InBev might have won over peer SABMiller, the deal could face delays in South Africa, where the now UK company started sales of its ubiquitous Castle Lager 120 years ago.

AB InBev, which is known to for ruthless cost-cutting, would certainly not be welcomed by local unions in a country with a 25-per cent unemployment rate and where the government had a track record of delaying deals while imposing strict conditions to prevent job losses.

"Given AB InBev's propensity to cut costs down to the bone, job cuts appear to be inevitable," Nic Norman-Smith, a fund manager at Lentus Asset Management, told Reuters.

According to commentators, that might not be easy in South Africa, where the mandate for anti-trust authorities included safe-guarding jobs. 

"It's highly likely the Competition Commission is certainly going to look over the deal with a fine-tooth comb for any signs of job losses," Norman-Smith said.