SABMiller yesterday confirmed it would buy South America's second-largest brewer in a $7.8 billion (€6.5 billion) deal that gives the UK-based brewer exposure to some of the world's fastest-growing beer markets.

The acquisition, which comes after a year of formal negotiations between Bavaria and several other bidders, will allow SABMiller to diversify its earnings away from slower growth markets in western Europe and North America, where beer has been losing market share to wine and spirits.

Following the purchase, 21 per cent of SABMiller's pro forma earnings will be derived from Latin America. Some 34 per cent will come from South Africa, 16 per cent from the US, 13 per cent from Africa and Asia, and 16 per cent from Europe.

SABMiller is now the best positioned brewer to take advantage of the world's most profitable beer markets, according to analysts.

"[ The acquisition] leaves SABMiller as the clear leader in terms of geographic platform," analysts at Morgan Stanley said.

Population and economic growth is expected to support increased beer consumption in Latin America over the next five years. Yesterday SABMiller forecast annual growth rates of 4 per cent in beer volumes in the Andean region, compared with a global industry average of about 2 per cent.

Graham Mackay, chief executive of SABMiller, yesterday said the company would use the acquisition to introduce some premium beer brands into the region. "Miller Genuine Draft would be a prime candidate."

Bavaria dominates the beer markets in Colombia, Peru and Ecuador, and also has a strong position in Panama. Its key brands include Aguila, Cristal, Pilsener and Atlas.

Bavaria's management team stressed yesterday that it had not necessarily chosen the highest bidder but had been looking for an acquirer that would allow the company to expand in South America.

Bavaria, which is 75 per cent family-controlled, will own 15.1 per cent of SABMiller following closure of the deal.