SABMiller today unveiled a takeover deal worth $7.8 billion that will confirm its position as the world's second-largest brewer.
The widely expected acquisition of Colombian rival Bavaria gives SABMiller a major presence in Latin America and sent its shares more than 4 per cent higher.
Bavaria controls more than 90 per cent of beer markets in Colombia, Peru and Ecuador - as well as a 79 per cent share in Panama.
SABMiller expects to save $120 million in annual costs from the deal within five years, while tapping the strong growth in beer consumption in the region.
Volumes of beer sold in the Andean region of South America are expected to grow annually at a compound rate of 4 per cent over the next five years - in contrast to just 2 per cent across the global beer industry as a whole.
SABMiller said the deal will "further diversify" its portfolio of businesses and brands such as Miller Lite, Pilsner Urquell, Peroni and Castle.
In 2004, Bavaria made pre-tax profits of $430 million and had gross assets of around $5.2 billion. This profits performance was dwarfed by the $2.42 billion banked by SABMiller in the year to March 31st, however.
Terms of the deal mean that SABMiller will take control of 71.8 per cent of shares in Bavaria. In return, the company will give the owner of Bavaria - Santo Domingo Group - around 15.1 per cent of its own stock.
SABMiller said it expects "substantial profit improvements" at Bavaria, which also produces soft drinks, water and milk, after it takes control.
Agencies