Top beer makers to join forces

SABMiller has accepted in principle a takeover bid worth 69 billion pounds ($106 billion) from Anheuser Busch InBev in a deal that seeks strength in size. The combined company would control nearly a third of the global market.

Belgium-based AB InBev, already the world's largest brewer, makes Budweiser, Corona, Stella Artois and Beck's. SABMiller, based in London, has Miller Genuine Draft, Peroni and Milwaukee's Best among its 200 or so brands.
AB InBev's determination to close the deal after five attempts shows how established beer brands know they have to act to adapt to shifting global tastes. In wealthy countries, people are turning to locally brewed beers or other drinks such as wine. In the U.S., craft beer sales account for 10 percent of beer volumes, compared with virtually nothing a few years ago. The same could soon apply in Europe, said Giulio Lombardi, senior director at Fitch Ratings.

"The global beer market overall is largely flat and in some regions is declining as other beverages such as wine continue to penetrate," said John Colley, professor at Warwick Business School in England. "Microbrewers and their highly differentiated cask ales also continue to make progress."

In coming years, beer sales are expected to grow most in emerging economies in regions such as Africa, where SABMiller has a strong presence. The sheer size of the deal, however, is likely to invite resistance from regulators, notably in the U.S. and China, amid concerns that the merger could stifle competition and reduce consumer choice. In the U.S., any deal is widely expected to require the sale of Miller's stable of beers.