£71bn brewer mega merger on the brink

THE £71bn takeover of SABMiller by rival Anheuser-Busch InBev has been thrown into doubt after the fall in sterling caused a row with an activist investor.

Sterling is down more than 10pc against the dollar since the deal was struck and shareholders are unhappy that they are not getting value for money from the largest ever UK takeover.

Earlier this week chairman Jan du Plessis said the board will review the deal once all regulatory approvals have been cleared. He told shareholders the board’s recommendation will take into account the fall in sterling.

It comes after Elliott Investors, an activist US fund which has a 1.46pc stake in SAB, wrote to the board to push for a higher cash offer. The proposed megadeal will be the fourth biggest in global corporate history.

When it was agreed in November AB’s £44-a-share cash offer for 59pc of the company, with shares offered for the remainder, was 13pc higher than it is now following the fall in sterling.

The anger from New York hedge fund Elliott, run by Paul Singer, is thought to be echoed by hedge fund managers at TCI and Davidson Kempner, who have also built up stakes in the brewer, according to the Financial Times.

Chris Beauchamp, a senior market analyst at broker IG, said: ‘The clear risk with such big deals, with so many moving parts, especially where foreign exchange is concerned, is that until the actual merger is done there is always the risk that they may fall apart.’

‘Disgruntled SABMiller shareholders can hardly be blamed for looking askance at a deal that now offers a much less attractive return thanks to the plunge in sterling, and now they’re hoping that they can get AB InBev to boost its terms, or even perhaps another suitor may come along.’

The fact that the deal has taken so long is in part due to the competition-regulator approvals it needed. It has received the go ahead from watchdogs in Australia, Europe and South Africa and it had been hoping to close the deal by the end of the year. It got the go ahead in the US this month after AB InBev promised to sell SAB’s stake in MillerCoors.

However, if shareholders demand a new price, it could set the takeover back months. It could instead propose to pay more in shares rather than cash. In the meantime, the two brewers have also made other disposals and SAB has sold Peroni and Pilsner Urquell in Europe. AB InBev will continue to own Budweiser, Beck’s and Stella Artois.

Mike van Dulken, head of research at broker Accendo Markets, said: ‘Mega deals are never done until they are done.’

He said the plunge in the pound is a sensible rational and not ‘merely an opportunistic attempt to get more money out of Anheuser-Busch InBev’.

SABMiller shares rose 0.2pc or 10p to 4440p.

SAB declined to comment.