It marked a big advance on what went before when the Chancellor announced a series of rules to govern the public finances at the start of his tenure eight years ago. Prior to that there were few disciplines on tax and spend that meant anything, other than the sanction of markets, which was justifiably and frequently harsh. Unlike several recent deals in the biotech sector, Arakis is being valued at significantly more than the £49m it has so far spent on drug development work.Sosei was set up in 1990 to buy the Japanese rights to drugs on sale elsewhere in the world, or to look for new uses for old drugs developed by Japanese pharmaceuticals companies. He said he stood back from the negotiations to avoid a conflict of interest.Sosei will pay £11.7m in cash and the remainder in shares to Arakis investors, who include the private equity groups Merlin Biosciences, 3i and Nomura.

Its main product is a prostate cancer drug, expected to be launched in Japan next year.. The sale to Sosei gets it done in one go and, for investors, is in effect an IPO in Japan."Mr Chiswell - the founder and former chief executive of Cambridge Antibody Technology and now the chairman of the biotech industry lobby group, the BIA - is also the chairman of Sosei. Biotech companies including EpiTan and Renovo have shelved flotation plans and ProStrakan, the Scottish drug company, had to cut its float price.David Chiswell, a non-executive director at Arakis, said: "Like Sosei, Arakis has ambitions to be a big global company, and whatever happened merger and acquisition activity would have been part of that after an initial public offering. The Anglo-Japanese biotech group Sosei is paying £106.5m in cash and shares for Arakis, whose inhaled drug for chronic lung disease - developed with the AIM-listed Vectura - was licensed to the Swiss giant Novartis in April in a deal worth up to £200m. Arakis had appointed Dresdner Kleinwort Wasserstein to examine a flotation, but the new issues market has become more difficult in recent months. Arakis, the biotechnology company which signed the sector's biggest licensing deal of recent years, has abandoned a stock market float in favour of a sale to a Tokyo-listed company. His choice of SABMiller - "for looks rather than money" - will be a blow to Heineken, which had fancied its chances.. Industry sources said the creation last year of the South American brewing giant spurred Mr Santo Domingo to seek a tie-up with a bigger rival.

The South African group, which also owns breweries in El Salvador and Honduras, has promoted Barry Smith, who has spent the past two years in the US at Miller, to run the Latin American division - the group's second biggest after South Africa.The new group will be a force to rival InBev, which was formed by the $11bn takeover of Brazil's AmBev by Interbrew of Belgium. It expects to achieve annual cost savings of $120m by 2010.Mr Mackay said he had been talking to Julio Mario Santo Domingo, the 80-year-old patriarch, for "the thick end of a year" about a bid "This is a big entry point for us in the continent. The Andean region has good growth and it is clearly going to be an attractive market," he said. But he added: "This deal must and will stand on its own."Two Santo Domingo family members - Julio Mario's son, Alejandro, and his cousin, Carlos Perez - will sit on the regional management board, although the family has the right to appoint two directors on SABMiller's executive board. It will not be able to sell any shares for five years.SABMiller is issuing 225 million shares worth about $3.5bn in return for the family's 72 per cent stake. It is making a cash offer for $19.48 to buy out minority shareholders. It will spend $1.5bn, funded with cash, to buy out other minority equity holders and will assume $2bn of debt.