SABMiller, the world#;s second largest brewer, created by the acquisition of Miller Brewing by South African Breweries, has dropped plans to raise close to £650m in a share placement.

In a statement last night the company said: “In light of prevailing market conditions, SABMiller plc has decided, in the best interests of its shareholders and the company, not to proceed with the proposed placing of ordinary shares.”

The move comes just 12 hours after SABMiller had announced its intentions to build a considerable warchest to pursue global acquisitions by a placing to institutional investors of 120m shares worth, at yesterday's close around £650m. The group's share capital would have enlarged by around 12%.

Yesterday Nick Chaloner, director of communications, had said the placing would give the company flexibility in the face of a rapidly consolidating global beer industry, including "opportunities to enhance its position as a global brewer".

Chaloner said: "Basically, we have a pipeline of deals." The areas expected to have been targeted by SABMiller were the markets where it already has a foothold, such as China, Central America, India and Africa.

SABMiller said it would likely resurrect the issue later in the year, but conceded it may lose the flexibility to pursue specific deals.