The long-brewing deal between beer giants SABMiller (SAB) and its Belgian-Brazilian rival Anheuser-Busch InBev looks closer after the former confirmed an approach.
Any deal is likely to make it into the top 10 of all time in dollar terms, according to Dealogic.
Philip Gorham, an analyst at Morningstar, said it would likely "almost be a done deal", given he expected Anheuser would have already scoped out the feelings of SAB's two largest shareholders - Altria (27 per cent) and the Santo Domingo family, which acquired a 15.1 per cent stake in SAB in 2005 after agreeing to its Bavaria Brewery being merged away.
Mr Gorham did note several hurdles, including the fact either Anheuser or SAB would likely have to end their respective PepsiCo (US:PEP) and Coca-Cola (US:KO) bottling deals and SAB would likely have to exit joint ventures in the US and China for the deal to go ahead. But he said one of the largest barriers - valuation - had been removed recently thanks to the emerging markets sell-off. SAB is heavily geared into emerging markets thanks to its strong presence in Africa - something Anheuser lacks - and its share price has roughly tracked the MSCI Emerging Markets index down in the recent volatility.
The analyst said a top price of £40 per share based on $1bn of cost savings, something Anheuser is well versed at achieving given its numerous acquisitions, could be achievable before denting shareholder value.
Canaccord Genuity's Eddy Hargreaves said a take-out price of 4,300p incorporating $2.5bn of synergies. "We do not doubt Anheuser's ability to execute this deal," he said.
Mr Gorham added SAB could swallow a "poison pill" to make itself less attractive. One target could be Molson Coors (US:TAP), its US joint-venture partner or, given it was almost a year to the day Heineken turned down its advances, it could try coughing up more cash for a deal with the Dutch brewer. Shares in both rose strongly after the SABMiller approach was made public.
