Brussels/London: ABMiller has indicated that its board would be prepared to accept the offer and has asked for a two-week extension to the UK-imposed deadline set for 1600 GMT on Wednesday for a formal bid. The new deadline is on 28 October.
"We have written extensively on the attractions of (an ABI/SAB combination) since 2011 and continue to see major long-term benefits for ABI shareholders now," said Canaccord Genuity analysts.
The new group would combine AB InBev's Budweiser, Stella Artois and Corona lagers with SABMiller's Peroni, Grolsch and Pilsner Urquell. AB InBev would add certain Latin American and Asian breweries to its already large presence and, crucially, enter Africa for the first time.
Africa is expected to see a sharp jump in the legal drinking age population in coming years and a fast-growing middle class more willing to switch to lagers and ales from illegal brews.
For many observers this would be the final chapter of decades of consolidation in brewing. The big four, AB InBev, SABMiller, Heineken and Carlsberg, are already present across the globe and brewing more than half of the world's beer.
The parties have agreed that AB InBev would pay a break fee of $3 billion to SABMiller in the event the transaction fails due to the significant regulatory issues or because AB InBev shareholders do not back it.
The new offer unveiled on Tuesday surpasses a Monday proposal set at 43.50 pounds in cash and is 50 percent above SABMiller's shares on 14 September, the day before speculation surfaced about an impending AB InBev approach.
The partial share alternative remains, designed for SABMiller's two main shareholders, cigarette-maker Altria and the BevCo company of Colombia's Santo Domingo family, who own 40.5 percent of the UK-based brewer.
Were they to accept the discounted alternative and all other shareholders took cash, the offer would be worth £68.5 billion ($104 billion) at current prices.
SABMiller shares were up 9.0 percent at 1045 GMT, while AB InBev's were 1.7 percent higher.
"There's so much we don't know – we don't know what costs they'll take out, we don't know what they'll get for the asset sales that they'll have to make. But if you make reasonable assumptions about those, I think it's a pretty good price all around," said Morningstar analyst Phil Gorham.
Major antitrust hurdles
There are significant antitrust hurdles to any combination, particularly in the United States, where the companies would have about 70 percent of the beer market.
A deal would likely result in Denver-based Molson Coors acquiring SABMiller's 58 percent stake in their US joint venture.
Any merged group may also have to sell interests in China, where SABMiller's CR Snow joint venture with China Resources Enterprise is the market leader.
It would also force change in the wider beverage sector, with SABMiller a large distributor of Coca Cola while AB InBev has ties with rival PepsiCo.
Bernstein Research beverage analyst Trevor Stirling said that he rated the chances of the deal going through at 80 percent, with antitrust issues being the main risk.
"There is a chance that due diligence throws up something nasty," he said, but added that SABMiller would be unlikely to have accepted AB InBev's approach if they knew of a major problem.
Morningstar's Gorham said that, of remaining assets, the beer business of Guinness and spirits maker Diageo looked particularly attractive, with Heineken a possible buyer.
Carlsberg's new management is likely to have its hands full with sorting out problems in Russia for some time.
"With all the major M&A targets now taken, and M&A so important to brewers’ growth, it raises the question of where next for global brewers as they bid to carry on growing," said Jeremy Cunnington, a drinks analyst at Euromonitor International.
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Updated Date: Oct 13, 2015 19:45:10 IST