The £71 billion beer deal of the decade is happening

Budweiser-owner AB InBev and SABMiller have reached an early agreement on the biggest brewing industry deal of the decade and one of the biggest mergers in history.

The boards of both companies say in a statement Tuesday that they have reached an "agreement in principle on the key terms" of a deal.

As part of the new deal, AB InBev has raised its offer for SABMiller to £44 ($67.62) a share, valuing the brewer at £71.2 billion ($109.4 billion).

SABMiller is the world's second largest brewer and makes beers such as Peroni, Grolsch, and Fosters.

The final offer is 50% above where shares where were when AB InBev first approached SABMiller and a whole £6 above AB InBev's initial offer of £38 a share.

The agreement on a deal that's been dubbed "Megabrew" is just in time - Wednesday was the deadline for a deal to be reached under UK takeover law.

The merger will create a $250 billion (£162.6 billion) beer giant that controls a third of the world's beer supply and bring together iconic brands such as Stella Artois, Corona, Budweiser, Grolsch, and Pilsner Urquell.

Deal talks were first revealed back in mid-September, but London-listed SAB has been playing hardball with AB InBev, the world's largest brewer. SAB has knocked back several offers, the most recent of which was a £43.50 ($66.85) a share bid on Monday.

The board of SABMiller have told AB InBev they are prepared to "unanimously recommend" the latest deal.

AB InBev has a dominant market share in North America, while SABMiller is more prominent in Europe, Africa, and Asia. The North American market is stagnant, while SAB's markets are growing fast, hence the rationale for AB InBev to buy its rival.

As part of the deal AB InBev is expected to spin off SAB's Miller brand, which is big in the US, to avoid a problem with competition law.

But Reuters is reporting that AB InBev is already under scrutiny from the US Department of Justice for an unrelated competition issue - buying up distributors and allegedly squeezing out small craft breweries.

AB InBev now has until October 28 to make a firm offer for SABMiller (this agreement was in principle). The US giant has agreed to pay SABMiller $3 billion (£1.95 billion) if it backs out once it's committed or fails.