South African Breweries Plc is considering a merger with the US brewing giant Miller, in a move that would create the world's number two beer maker, Reuters quoted sources as saying on Friday.

Though no formal talks have taken place, it was reported that SAB has made preliminary contact with Miller Brewing Co.

Both South African Breweries and Miller's owner Philip Morris declined to comment.

The move would lessen SAB's exposure to the Rand and lower it's cost of capital from circa 14% to around 10%.

But analysts said synergies would be limited as SAB has little US exposure.

Stuart Price, a beverage analyst with WestLB Panmure said the deal would give SAB the opportunity to distribute its Czech beer brand more effectively in the USA and SAB does brew Miller under licence in Russia.

This alleged deal is only one half of the SAB/Miller/S&N referred to as SCAR by leaked and falsified documents from Interbrew's banker earlier this year.

Price said that a SAB/Miller merger "could make a tie up with S&N more likely in the longer term".