It's Miller Time For S. African Brewer

South African Breweries PLC will buy Miller Brewing Co. in a $3.6 billion stock deal that will make it the world's second-largest brewer, the London-based company announced Thursday.

The new company will be called SABMiller PLC and will compete in the U.S. market with Anheuser-Busch Cos., the world's largest brewer.

Miller spokesman Michael Brophy said the acquisition would not lead to any job cuts at Miller's seven U.S. breweries.

The deal is expected to close as early as July, pending shareholder and regulatory approval, South African Breweries said.

Under the deal, SAB will also assume $2 billion in Miller debt. Miller's parent company, Philip Morris Cos. of New York, would initially keep a 36 percent stake in SABMiller.

The Miller deal marks a major step in SAB's strategy of expanding largely through acquisitions to become a top player in the global beer business.

"SABMiller (would) be one of the world's most diverse international brewers with leading market positions in Europe, North America, Central America, China and Africa," South African Breweries said in a statement.

Philip Morris chief executive Louis Camilleri said SABMiller would have "arguably the best geographic footprint among all global brewers."

An SAB spokesman said on condition of anonymity said the deal also reduces the company's dependency on earnings made in the rand, the weak South African currency.

SAB already exports Pilsner Urquell to the United States and has said it hopes to expand its sales there. Its other major brands include Castle in southern Africa, Tyskie in Poland, Zolotaya Bochka in Russia and Zero Clock in China.

SAB's shares slipped 3.4 percent to 556.50 pence, or $8.12, in early trading on the London Stock Exchange.

SABMiller would be headquartered in London, with Miller's Milwaukee headquarters acting as a subsidiary, said Brophy, the Miller spokesman.

SAB already is the world's fourth-largest brewer by volume, after St. Louis-based Anheuser-Busch, Belgium's Interbrew and Heineken NV of the Netherlands, according to data from 2000 compiled by British beverage consultancy Canadean. Miller ranks sixth in the world.

Brophy said Miller and SAB felt a union was the best way for them to stay competitive.

"In this day in the brewing industry where consolidation is occurring, this is a very important move for both companies, and that's why people at Miller are very enthusiastic," he said.

Philip Morris has wanted to sell its beer business because Miller has lost market share over the past decade, analysts said.

Camilleri told industry analysts last fall that the tobacco and food giant's beer business has continued to face challenges. Profits have dropped as sales declined and advertising costs increased for Miller's strongest brands, such as Miller Lite and Miller Genuine Draft.

For SAB, the deal would provide a major base in the United States and reduce its dependency on earnings made in the rand, the weak South African currency.

Until Thursday's deal, the majority of SAB's business was in Africa. The company was founded in 1895 in South Africa, and retains a listing on the Johannesburg stock exchange. It moved its primary listing to the London Stock Exchange in 1999, to increase its access to capital for international expansion.

Miller was founded in 1855 in Milwaukee, a city renowned for its breweries.