The Boards of Anheuser Busch InBev (AB InBev), Leuven, Belgium, and SABMiller plc, London, announced that they have reached agreement in principle on the key terms of a possible recommended offer to be made by AB InBev for the entire issued and to be issued share capital of SABMiller.

AB InBev’s 2014 sales were more than $47 billion, while SABMiller’s 2014 sales were approximately $22.3 billion.

The merger would combine SABMiller’s brands, including Miller Lite and Redd’s Apple Ale, with AB InBev’s portfolio, which includes Bud Light, Budweiser and Bud Light Lime-A-Rita lineup.

Under the terms of the possible offer, SABMiller shareholders would be entitled to receive 44.00 pounds per share in cash, with a partial share alternative (PSA) available for approximately 41 percent of the SABMiller shares. The all-cash offer represents a premium of approximately 50 percent to SABMiller’s closing share price of 29.34 pound on Sept. 14, the last business day prior to renewed speculation of an approach from AB InBev.

The PSA consists of 0.483969 unlisted shares and 3.7788 pounds in cash for each SABMiller share, equivalent to a value of 39.03 pounds per SABMiller share on Oct. 12, representing a premium of approximately 33 percent to the closing SABMiller share price of 29.34 pounds as of Sept. 14, the companies say.

In addition, under the possible offer, SABMiller shareholders would be entitled to any dividends declared or paid by SABMiller in the ordinary course in respect of any completed six-month period ended Sept. 30 or March 30 prior to completion of the possible transaction, the companies say. The transaction shall not exceed $0.2825 per share for the period ended Sept. 30 and a further $0.9375 per share for the period ending March 31, 2016, (totaling $1.22 per share); nor shall it not  exceed an agreed upon amount between AB InBev and SABMiller in respect of periods thereafter, which shall be disclosed in any announcement of a firm intention to make an offer, they add.

The Board of SABMiller has indicated to AB InBev that it would be prepared unanimously to recommend the all-cash offer of 44.00 pounds per SABMiller share to SABMiller shareholders, subject to their fiduciary duties and satisfactory resolution of the other terms and conditions of the possible offer, the companies say.

In connection with the possible offer, AB InBev would agree to a "best efforts" commitment to obtain any regulatory clearances required to proceed to closing of the transaction. In addition, AB InBev would agree to a reverse break fee of $3 billion payable to SABMiller in the event that the transaction fails to close as a result of the failure to obtain regulatory clearances or the approval of AB InBev shareholders, the companies say.

This possible merger would be another to AB InBev’s acquisitions of small are large brands. In 2012, the company acquired the remaining stake of what was then Grupo Modelo for $20.1 billion. However, the Grupo Modelo stake in what was then Crown Imports LLC, a joint venture in the United States between Grupo Modelo and Constellation Brands Inc., was sold to Crown Imports for $1.85 billion. The division has since been renamed Constellation Beer Division.

AB InBev also has acquired craft brewers within the past few years, including Goose Island and Elysian Brewing Co.