Brew­ers’ merger turns flat as SABMiller re­jects AB InBev


Bri­tish brewer SABMiller on Wed­nes­day re­jected a US$103 bil­lion takeover of­fer from An­heuserBusch InBev, leav­ing the world’s big­gest maker of beer to de­cide whether to re­turn with a fourth bid.

SABMiller, brewer of Foster’s lager, said its board had “unan­i­mously re­jected” the third of­fer from Bel­gian-Brazil­ian firm AB InBev, in­sist­ing it “sub­stan­tially un­der­val­ues” the group.

“The board, ex­clud­ing the di­rec­tors nom­i­nated by (big­gest share­holder) Al­tria Group Inc., has unan­i­mously re­jected” the im­proved £68 bil­lion (US$103 bil­lion) of­fer, the com­pany said a state­ment.

SABMiller added that its state­ment was re­leased “with­out the prior agree­ment or ap­proval of AB InBev,” whose beers in­clude Bud- weiser, Corona and Stella Ar­tois.

AB InBev an­nounced Wed­nes­day an im­proved takeover of­fer worth £42.15 per SABMiller share — a pre­mium of about 44 per­cent to SABMiller’s clos­ing share price of £29.34 on Sept. 14, prior to the first of­fer.

SABMiller shares were up 0.95 per­cent at £36.55 fol­low­ing the rejection in Lon­don af­ter­noon trade, com­ing off early gains of around three per­cent af­ter the re­vised of­fer was an­nounced. InBev was up 1.55 per­cent in Brus­sels.

AB InBev had ear­lier said it was dis­ap­pointed that SABMiller had re­jected its two pre­vi­ous lower-priced of­fers “with­out any mean­ing­ful en­gage­ment.” It had yet to re­act to news of the third rejection.

A deal would cre­ate a global “megabrewer” worth about 220 bil­lion eu­ros ( US$250 bil­lion). “AB InBev is very sub­stan­tially un­der- valu­ing SABMiller,” chair­man Jan du Plessis said in a state­ment on Wed­nes­day, de­scrib­ing his com­pany as the “crown jewel of the global brew­ing in­dus­try.”

For its part, InBev said the deal was fair. “AB InBev be­lieves the re­vised cash pro­posal of £42.15 per share is at a level that the board of SABMiller should rec­om­mend,” it said in a state­ment.

Another Raised Of­fer?

With the lager saga al­ready drag­ging on for weeks, an­a­lysts say InBev may have to in­crease its of­fer to around £45 a share to get the deal done at a time when the global play­ers are look­ing to con­sol­i­date.

The big brew­ers are look­ing for tie-ups to off­set the in­roads made by small in­de­pen­dent brew­ers cater­ing to lo­cal de­mand for craft beers and other less brand-heavy prod­ucts.

SABMiller share­hold­ers re­jected two pre­vi­ous of­fers at £38 and then £40 and an­a­lysts said they may well do the same again.

The Bri­tish brewer re­called when InBev had dis­cussed of­fer­ing £42 in talks last month, the board had con­cluded that it was too low, not­ing that the new pro­posal was only 15 pence higher. “We should not be sur­prised to see a slightly raised of­fer over the next week,” Si­mon Davies of Canac­cord Ge­nu­ity in Lon­don said in a note.

‘Decade of con­sol­i­da­tion’

Jeremy Cun­ning­ton at Euromon­i­tor In­ter­na­tional added: “AB InBev’s bid for SABMiller is the in­evitable con­clu­sion of over a decade of con­sol­i­da­tion within the brew­ing in­dus­try. The com­pleted deal will give AB InBev a 29-per­cent mar­ket share, which is a 20 per­cent­age point lead over the next big­gest brewer, Heineken,” he said.

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