Diageo and SABMiller Climb on Merger Talk

SABMiller Diageo MergerSource: Interactive Investor

Shares in Diageo (DGE) and SABMiller (SAB) continued to rise on speculation that the companies will merge, creating a drinks group worth over £100 billion and putting paid to a rumoured bid from drinks giant AB Inbev.

The Peroni and Grolsch-maker SABMiller, the larger of the two with a market capitalisation of around £54 billion, is said to be contemplating a deal with Smirnoff and Baileys manufacturer Diageo to ward off AB Inbev which could be interested in using Diageo's beer business as a platform for further access to Africa.

The companies have previously worked together on corporate deals, such as in 2007 when they looked at carving up Scottish & Newscastle.

Diageo shares rose 1.2% to 1,888p in early trading from a 52-week low of 1,768p, while SAB was up 0.15% to 3,394p from a 52-week low of 2,661p.

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