The rumors are flying: SABMiller of London, the world’s second-largest brewer, is reportedly in talks to buy the beer business of Mexican brewer FEMSA (parent company of Tecate and Dos Equis) for perhaps a cool $9 billion.

That would set up a showdown in Mexico between SABMiller and Anheuser-Busch InBev, the world’s No. 1 brewer. Anheuser-Busch InBev happens to control a 50 percent stake in Grupo Modelo, Mexico’s largest beer-maker and FEMSA’s main competitor.

SABMiller, which lost its number-one spot in the world after InBev bought Anheuser-Busch in 2008, “is likely to make acquisitions to expand its scale,” Morningstar analyst Ann Gilpin wrote in a note to investors.

With a market capitalization of roughly $40 billion, SABMiller “has the financial wherewithal to acquire FEMSA, and an acquisition makes strategic sense,” Gilpin wrote.

As Gilpin notes, SABMiller is noticeably absent from key Latin American markets like Mexico and Brazil - two strongholds of Anheuser-Busch InBev. SABMiller, meanwhile, has operations in Colombia, Peru, Ecuador, Honduras, and El Salvador. “Putting Mexico and Brazil in its fold would be a big driver of growth,” said Gilpin.

But there’s a catch. An acquisition of FEMSA would place SABMiller squarely against AmBev, which has 67 percent of the beer market in Brazil. It would also match SABMiller up against Grupo Modelo (maker of Corona), which controls 55 percent of the Mexican market. Beyond its large stake in Modelo, Anheuser-Busch InBev also controls AmBev.

“This would put SABMiller head-to-head with its chief rival, especially in Brazil where AmBev is a fierce competitor,” Gilpin wrote.

Very, very interesting. We will follow the unfolding drama in Mexico.