updated 7/19/2005 10:46:44 AM ET 2005-07-19T14:46:44

SABMiller PLC said Tuesday it is acquiring a controlling stake in Bavaria SA, South America's second-largest brewer, in a deal worth about $5.6 billion.

SABMiller said it was buying a 72 percent stake in Bavaria from Santo Domingo Group for $3.5 billion. The transaction will take the form of a merger, with Santo Domingo Group taking a 15.1 percent stake in SABMiller.

Following completion of that transaction, SABMiller said it plans a cash offer of $19.48 per share to minority shareholders in Bavaria in Colombia. SABMiller will also make a cash offer for some shares in Bavaria's subsidiary in Peru, and has agreed to buy certain minority interests in some subsidiaries.

The company estimated those transactions would cost $2.1 billion.

Bavaria controls 99 percent of the beer market in Colombia and Peru, 93 percent in Ecuador and 79 percent in Panama. Key brands include Aguila, Cristal, Pilsener and Atlas.

Brewers seeing sluggish sales in Western Europe and the U.S. are expanding operations in markets like places like China and the new members of the European Union. Latin America is also seen as an attractive market.

Shares in SABMiller rose nearly 7 percent to 947.50 pence ($16.55) in trading on the London Stock Exchange.

The deal is subject to approval by SABMiller shareholders.

Copyright 2005 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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