The venture, MillerCoors, will generate around $500 million of annual cost savings by year three after completion and is subject to obtaining clearance from US competition authorities, the two groups said in a statement.

The deal brings together the second-largest US brewer with beer brands such as Miller Lite and Miller Genuine Draft and the third-largest, Molson Coors, which brews Coors Light, Molson Canadian and Molson Dry beers.

The companies said final agreement for the deal is expected by the end of 2007.

Molson Coors vice chairman Pete Coors will become chairman of MillerCoors while SABMiller chief executive Graham Mackay will be vice chairman. Molson Coors CEO Leo Kiely will be chief executive and Miller CEO Tom Long will become president and chief commercial officer of MillerCoors.

Each brewer will have a 50 per cent voting interest in the joint venture, with SABMiller having a 58 per cent economic interest and Molson Coors 42 per cent. The joint venture will have net annual revenues of about $6.6 billion.

US market leader, Budweiser -brewer Anheuser-Busch has around a 50 per cent share of the national beer market and is a major force in beer pricing in the US market.