SABMiller, one of the world's biggest brewers, is to merge its US operations with family controlled Molson Coors, creating a powerful competitor to America's market leader, Budweiser-maker Anheuser-Busch.
The joint venture deal unites America's second and third largest beer groups, providing opportunities for deep cost-cutting programmes across both businesses expected to generate $500m (£271m) of annual savings. The combined group, to be called MillerCoors, brings together London-listed SABMiller's 57.3m-hectolitre business in North America with the 49.5m-hectolitre business of Molson Coors, which is best known in the UK as the company behind Britain's biggest selling lager Carling.
A hectolitre is equivalent to 180 pints.
It will be 58% owned by SABMiller with Molson Coors holding a 42% interest. Voting rights will be divided equally between the two.
The combination would create a credible competitor to Anheuser-Busch, the firm behind Budweiser, which dominates the US market with sales of 120m hectolitres and a 48% market share. Both SABMiller's Miller division and Molson Coors have for years been sucked into costly price wars with Anheuser, particularly focused on low-carbohydrate "Lite" sub-brands.
SABMiller has been courting Molson Coors for some time. Norman Adami, head of SABMiller's Americas division, told investors in June there could be cost efficiencies in a closer relationship. He also said Molson Coors had a "great portfolio and management team".
This summer Mr Adami, one of SABMiller's most talented executives, announced he was retiring back to South Africa following the successful integration of Bavaria, a major acquisition in Colombia. Some industry watchers felt SABMiller's decision not to replace Mr Adami reflected the group's desire to move away from a war footing in the US, focusing on cutting costs from Miller and investing more heavily behind more lucrative growth businesses in emerging markets where SABMiller has a strong track record.
Just before lunchtime, shares in SABMiller were trading up 14p at £14.83.
