Bud’s parent firm boosts offer for rival brewer
Anheuser-Busch InBev merger with SABMiller would create global giant in beer industry
LONDON— The brewer Anheuser-Busch InBev raised the price it has offered to pay for its rival SABMiller on Tuesday, making it the latest in a series of deals that have been affected — or in some cases driven — by the declining value of the pound after Britain’s vote to leave the European Union.
In the weeks since the “Brexit” vote, a Chinese conglomerate has bought a London-based movie theatre operator and a Japanese internet giant has acquired a British semiconductor designer, while questions have been raised over the merger of the London Stock Exchange with Deutsche Borse.
Now, the combination of SABMiller and Anheuser-Busch can be added to that list. The agreement was reached in November after months of negotiations and SABMiller said Tuesday that it was reviewing the revised offer.
The merger would create an industry giant accounting for about 30 per cent of global beer sales.
It would give Anheuser-Busch, already the world’s largest brewer, a substantial operation in Africa, where it has little presence and greater dominance in Latin America.
But uncertainty after the vote last month has weighed on the value of the pound against the dollar and the euro. The primary stock listing for AnheuserBusch InBev, which is based in Belgium, is in Brussels, where the shares trade in euros.
The stock also trades in pounds in London, and the company has U.S. depositary receipts that trade in dollars in New York.
The activist investors Elliott Management and the Children’s Investment Fund have taken stakes in SABMiller, and Elliott was among investors that sought a higher price.
Anheuser-Busch InBev said Tuesday that it would now pay £45 ($78 Canadian), a share in cash for SABMiller, an increase of $1.73 from its prior offer. That increased offer would value SABMiller, which is based in London, at $137 billion.
Investors would have an option to accept a cash-and-share alternative that would pay $8.08 in cash and 0.83 in restricted shares for each share of SABMiller. The share alternative would be available for up to 41 per cent of SABMiller’s shares.
Shares of SABMiller closed at $76.97 in London on Monday.
In a news release, Anheuser-Busch InBev said that the offer was “final and that it will not further increase the cash consideration or the cash element or the exchange ratio of the partial share alternative.”
Anheuser-Busch InBev initially made the offer of a partial share alternative to win the support of SABMiller’s two largest shareholders — the U.S. tobacco giant Altria and the Santo Domingo family of Colombia. The share alternative was intended to allow them to avoid a huge tax bill from the sale of their holdings.
But some investors raised concerns in recent weeks about an increase in the value of the share alternative as the pound has fallen sharply since the June vote.
The revised share alternative was worth $88.65 a share as of Monday’s close, but that did not account for “any discount for the unlisted nature of the restricted shares and the restrictions on transfer that will apply to them,” Anheuser-Busch InBev said.
Those shares would be subject to a lock-up period of five years.
In a separate statement, SABMiller said it was considering the revised offer and confirmed that its chairman had a discussion with Anheuser-Busch InBev’s chairman last week about the offer in light of “recent exchange rate volatility and market movements.”
SABMiller also said that its board had hired Centerview Partners to provide additional financial advice alongside that of its existing advisers.
Aberdeen Asset Management, an SABMiller shareholder, said in a statement Tuesday, however, that the revised deal “remains unacceptable” because it undervalues the company and favours SABMiller’s two largest shareholders.
“We have engaged with SABMiller’s board on the differential treatment of shareholders since the deal was first constructed,” Aberdeen said. “The way that the value of the partial share offer has diverged from the cash offer has compounded our discomfort.”
Anheuser-Busch has received regulatory approval in the European Union, South Africa and the United States for the transaction and is awaiting approval in China.
It also has entered into a number of agreements to sell assets from the combined company in order to placate regulators about the deal.
AB-InBev initially tried to win the support of SABMiller shareholders, tobacco giant Altria and the Santo Domingo family