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SABMiller (LON:SAB) has confirmed that rival Anheuser-Busch InBev has made a takeover approach to the South African brewer.
Reacting to press speculation, SABMiller said AB Inbev had told it that it planned to make a proposal to acquire the company, which makes Peroni lager.
AB Inbev needs to make a bid or walk away by a so-called "put-up-or-shut-up" deadline of 1700 on October 14.
SABMiller added that it had not yet received a proposal, its board had no details of any potential offer terms and there was no guarantee a bid would materialise.
"The board of SABMiller will review and respond as appropriate to any proposal which might be made," SAB Miller said.
"In the interim, shareholders are strongly advised to retain their shares and to take no action."
Inbev has been rumoured to be interested in SABMiller for more than 10 years, although there has been speculation that SABMiller could still buy a rival to fend off a bid.
In September, Dutch brewer Heineken rejected a takeover offer from SABMiller, which is now rumoured to be eyeing Johnnie Walker whisky and Guinness group Diageo (LON:DGE).
Another intriguing market theory is that cash-rich Diageo could become a target for US activist investors who would buy the group and break it up.
Canaccord Genuity predicted AB Inbev's approach for SAB Miller in a note last week.
The broker's Eddy Hargreaves said AB Inbev was interested in SAB Miller to boost its presence in Asia-Pacific, in particular China.
He said the deal could trigger competition concerns as the pair have a combined volume market share in China of 41%.
"Anti-trust considerations would be an issue - but we continue to think that more than one acceptable solution could be found," Hargreaves said.
He added: "We think the group is well-positioned for acceleration in EBITDA growth in China, as well as elsewhere in APAC (especially Vietnam and India - and also in S Korea, where the potential to improve a weaker position in the premium segment was described as "huge")."
Who they are and what they do
Belgium's Anheuser-Busch InBev - the world's biggest brewer - makes Budweiser, Stella Artois and Corona, while Britain-based SABMiller - which holds second position - owns Peroni, Grolsch and Pilsner Urquell beers.
AB Inbev employs about 1,000 people at its UK breweries in Magor, Samlesbury and Mortlake, as well as its company headquarters in Luton. It has at least 200 beer brands.
SABMiller has around 69,000 staff in more than 80 countries, from Australia, Zambia and Colombia to the Czech Republic, South Africa and the US, also producing more than 200 beers.
Formerly known as South African Breweries, SAB acquired US rival Miller Brewing Company in 2002, resulting in the renaming of the group as SABMiller.
A merged group would be worth about £177bn and would add AB InBev's dominance of Latin America to SABMiller's strong presence in Africa, as well as their breweries in Asia.