SABMiller rejects AB InBev’s sweetened takeover offer

09 Oct 2015


The world's largest brewer, Belgium-based Anheuser Busch InBev (AB InBev), has slammed UK rival SABMiller Plc's rejection of its latest £68-billion takeover offer on the grounds of undervaluation of the company.

In a statement yesterday AB InBev, the maker of Budweiser and Corona beers said, ''AB InBev is surprised that the board of SABMiller, excluding the directors nominated by SABMiller's largest shareholder, Altria Group Inc, who dissented, continues to say that this proposal ''still very substantially undervalues SABMiller.''

AB InBev said SABMiller's decision ''lacks credibility'' and ''if shareholders agree that we should be in proper discussions, they should voice their views and should not allow the board of SABMiller to frustrate this process and let this opportunity slip away.''

In its refusal, SAB Miller has also accused the ''highly conditional nature of the proposals,'' including significant regulatory hurdles in the US and China.

AB InBev said the company has done significant work on regulatory matters and has identified solutions that provide a clear path to closing and intends to work proactively with regulators to resolve any concerns.

AB InBev tabled its revised proposal two days ago agreeing to pay £42.15 ($64.80) per share of SABMiller, with a partial share alternative available for approximately 41 per cent of SABMiller shares. (See: Anheuser Busch makes new £68-bn offer for SABMiller).

AB InBev's previous two proposals were £38 per share and £40 per share in cash.

The raised offer represents a 44-per cent premium to SABMiller's closing price of £29.34 on 14 September 2015, the last business day prior to speculation of an approach from AB InBev.

SAB Miller's largest shareholder Altria Group Inc, the maker of Marlboro cigarettes, which owns a 27-per cent stake and has three positions on the board, has expressed its support for the deal.

AB InBev chief executive Carlos Brito said the new offer was designed ''with and for'' SABMiller's second-largest shareholder, the Santo Domingo family of Colombia, which hold around  14-per cent stake in the UK brewer.

Referring to the two biggest shareholders, Brito said, ''There's no transaction without both of these big shareholders supporting and taking the paper.''

The British company took hardly six hours to turn down the latest proposal.

It has become uncertain now whether AB InBev will be able to come out with a firm deal before the 14 October deadline fixed under the UK takeover regulations.

However, despite the uncertainties and disagreements, analysts think an acceptable deal will be hammered out as both the sides have a lot at stake. Many believe AB InBev will go higher than its latest offer, considering SABMiller's strength in the African beer market.

Shares in SAB Miller closed 0.2 per cent higher at £36.41 yesterday in London.

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