CGT on AB InBev share offers
In light of AB InBev’s take-over of SABMiller, SABMiller shareholders have to consider the capital gains tax (CGT) implications of the options they have been given. It would be helpful if you could explain the CGT implications in each of the following scenarios: • Scenario one: accept the cash offer. • Scenario two: partial share swop. This entails an “asset-for-share” swop, where a percentage of the SABMiller holdings (the proposed percentage is 41.6 percent) are swopped for shares in AB InBev, a cash adjustment is made for the shares swopped, and shareholders are paid out the balance in cash.
• Scenario three: 100-percent share swop, and shareholders are paid out for the associated cash adjustment.
In scenarios two and three, are shareholders entitled to roll-over relief on the shares swopped? What happens to the cash received?
In scenario two, there is an associated base cost, because some shares were effectively sold (that is, cash was received for the shares not swopped, and the cash adjustment was received for the shares swopped). Will all the cash received be subject to CGT using the base cost for the shares not swopped?
In scenario three, there is no associated base cost, because all the shares were swopped (and not sold for cash). But how will the cash received for the adjustment be treated: as a capital gain or as income?