Will Bud down Castle?

Brewing giant SABMiller's market value broke through the R1-trillion barrier yesterday as speculation over a possible takeover by industry leader Anheuser Busch InBev added froth to the share price.

SABMiller shares were up nearly 13% in afternoon trading yesterday after reports that AB InBev, the brewer of Stella Artois and Budweiser, was trying to finance a $122-billion takeover.

Neither of the two companies would comment on the possibility of the deal that would create the world's biggest brewer by far.

Shares in the South African company, listed on both the JSE and in London, rallied to nearly R690, but pared gains to about R670 shortly before close of trade, giving SABMiller a market value of more than R1-trillion.

But this might only be the beginning. According to Mark Saner, of financial services group Imara SP Reid, the rumour of a potential tie-up is not new and SABMiller's share price has rallied strongly on similar rumours before.

"However, this is the first time we have heard of a possible amount. A $122-billion deal would be worth around R850 a share with the current exchange rate - a 32% premium on Monday morning's opening price," he said yesterday.

SABMiller has itself been trying to acquire Heineken, a company about half its size, in order to stave off an AB InBev bid. But the Heineken family, who control the firm of the same name, rejected SABMiller's advances.

This opens the way for Belgium-based AB InBev to bid.

A report by the Wall Street Journal kicked markets into action yesterday by citing a source who said that the company was holding back until it had lined up its financing.