SABMiller Plc reveals approach from rival Anheuser-Busch InBev

18 Sep 2015


SABMiller, the world's second-largest brewer said on Wednesday that it had received a merger offer from larger rival Anheuser-Busch InBev NV.

SABMiller said in a statement following speculation on Tuesday that saw London-based SABMiller's shares surge as much as 4.1 per cent.

The release which was forced by the UK's Takeveover Panel, triggered a 28-day timeline for a formal, fully financed bid. Under the put-up-or-shut-up rule, as it is called, if AB InBev were to walk away from the transaction it would not be able to come back for six months.

Companies are required under stringent rules to confirm or deny any hint of a deal, whether it came from an anonymously sourced news article or unusual stock movement.

The rules were introduced by the Takeover Panel, the world's oldest acquisition oversight body, which oversees acquisitions in the UK.

''Media attention following disclosure of deal negotiations can be disruptive to the companies, and can kill an otherwise valuable deal'' said John Coates, professor of law and economics at Harvard University, Bloomberg reported.

At current prices, a merged group would have a market value of around $275 billion, and would combine AB InBev's dominance in Latin America with SABMiller's in Africa, both fast-growing markets, as well as their breweries in Asia.

"The real attraction is Africa, where AB InBev has no presence, as well as some add-ons in Asia and Latin America," said Societe Generale analyst Andrew Holland, Reuters reported.

AB InBev is among the world's top brewers who had been trying to enter new markets as they looked to overcome weakness in North America and Europe, where consumers increasingly opted for craft beers made by independent players or wine or spirits.

The world No 2 and maker of over 200 beers including Peroni, Grolsch and Pilsner Urquell, said on Wednesday it had been informed that AB InBev intended to make an offer which it would need to do by 14 October under UK rules.

Speculation about the merger which had been rife for some time, is expected to raise antitrust concerns in markets such as the US and China.

The timing of the approach, following over a decade of acquisitions by AB InBev, comes after a drop of around 15 per cent drop in SABMiller's share price since August.

"It's exactly the moment they've been waiting for," said Morningstar analyst Phil Gorham. "It makes sense financially for the first time in years."

Last yesr SABMiller Plc, and Coca-Cola decided to combine their soft drinks bottling operations in South and East Africa with and Gutsche Family Investments (GFI) to create a group with $2.9 billion in revenue across 12 fast-growing markets. (See: SABMiller Plc, Coca-Cola to merge soft drinks bottling operations in Africa).

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