By Saabira Chaudhuri 

LONDON-- SABMiller PLC's board has agreed on the key terms of a sweetened potential takeover offer by Anheuser-Busch InBev NV valuing it at GBP68 billion ($104.5 billion), setting the stage for the world's two largest brewers to combine.

After weeks of back and forth, SAB Miller's board has agreed to unanimously recommend to its shareholders AB InBev's proposal to pay GBP44 a share to buy the London-based brewer, marking a 50% premium to its share price on Sept 14, the day before media speculation about a potential deal emerged. For 41% of stock AB InBev is offering a partial-share alternative, essentially a combination of cash and stock translating into a lower per-share price of GBP39.03.

SABMiller has asked the U.K. Takeover Panel to extend the so-called put-up-or-shut-up deadline, under which AB InBev needs to make a firm offer for it or walk away, to Oct 28. The previous deadline was Wednesday.

If AB InBev can't get the necessary regulatory clearances for the deal to close, or its shareholders don't approve the deal, the brewer would pay SAB Miller a breakup fee of $3 billion. AB InBev said it will pay for the cash part of the deal through its internal resources and issuing new debt.

The revised proposal is the fifth AB InBev has made for SABMiller in recent weeks and comes after the Belgian brewer on Monday said it was prepared to offer SABMiller's shareholders GBP43.50 a share in cash and a partial-share alternative of GBP38.88, translating into a combined price of GBP67.4 billion.

SABMiller had rejected its first three proposals, saying they significantly undervalued it.

SABMiller's two largest shareholders, Altria Group Inc. and the Santo Domingo family--which have a 41% stake in the London-headquartered brewer between them--had initially come down on different sides of the offer. Altria, last week offered its support, but the Santo Domingo family joined the rest of the board in rejecting AB InBev's offer.

A tie-up between the two beer companies would bring household brands such as Budweiser, Corona and Stella Artois together with Pilsener Urquell, Grolsch and Peroni, and give the combined company a major presence in the U.S., China, Europe, Africa and Latin America. Together, AB InBev and SABMiller sell over 30% of the world's beer volumes.

Such a deal has been rumored for years, and has been described by some analysts as the last major piece of consolidation that remains in the beer industry. Research firm Euromonitor has estimated that the combined company's market share would be 29% after the deal after likely divestments, giving it a 20 percentage point lead over the next biggest brewer, Heineken NV.

Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com

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(END) Dow Jones Newswires

October 13, 2015 02:48 ET (06:48 GMT)