Beer giants Anheuser-Busch InBev and SABMiller have "agreed in principle" a blockbuster tie-up that would create the world's biggest drinks firm by some distance.

Here we explain what has been agreed - and what has not - and what it might mean for beer-lovers around the world.

What is the background to today's announcement?

AB InBev is the biggest beer company in the world, making more than 200 types of beer including Corona, Beck's and Leffe.

For some time it has been trying to secure a takeover deal for SABMiller, which is listed on the London stock exchange but has strong roots in Africa.

It is the world's second largest brewer, with beers such as Peroni and Foster's in its stable.

After being rebuffed four times by SABMiller, AB InBev has finally agreed a deal in principle this morning, which could value the former at almost £70 billion.

So SABMiller are not keen on the deal?

It is perhaps fairer to say that it is trying to ensure it secures the best possible price should a deal go ahead.

The initial offer from AB InBev was worth £38 a share whereas the latest offer is £44 a share, so it has benefitted from playing hard to get.

Why is AB InBev so keen on the deal?

The combined company would offer greater economies of scale. It would also help the firm grow business outside of its core Americas markets, specifically in Africa where SABMiller has a stronger presence.

Is the deal set in stone?

Not yet, no. The two companies still have to agree the terms of a formal offer, but it seems likely. They have extended the deadline to make a firm bid under City takeover rules to October 28.

AB InBev will be especially keen to ensure a deal is done, having agreed to pay a fee of three billion US dollars (almost £2 billion) if it fails to get approval from regulators and shareholders.

Assuming it goes ahead, it would clearly create a massive company...

That is putting it mildly. The combined mega-brewer could be worth up to £180 billion, responsible for creating close to a third of the world's beer.

It would also have more than three times the market share of the next biggest beer company, Heineken.

It would also mark the biggest foreign takeover of a British-based firm.

What will it mean for fans of either company's beers?

It is very hard to say at this point, not least because the deal is not yet 100 per cent confirmed, but it could mean less choice for consumers.

Analysts have suggested that the company might cut back on its newly-combined range of beers and invest more heavily in retained brands.