Beer giants back £79bn mega deal
After months of wrangling, owners of Foster’s and Budweiser agree takeover
TWO brewing giants are finally set to join forces in one of the biggest takeovers in British history.
The board of SABMiller has backed an improved £79bn bid from rival AB InBev – meaning that the decision will now be put to the former’s shareholders in a vote.
It will bring more than 400 world-famous brands such as Stella Artois and Foster’s beer under one roof and create a behemoth with a 30pc share of the global market.
Together, SAB and InBev produce 78.3bn litres of beer a year, enough to fill 31,320 Olympic-sized swimming pools.
The decision ends months of wrangling since a preliminary agreement was reached in November, as approval was sought by watchdogs, shareholders voiced concerns and there was disagreement over price.
InBev had to fight hard to convince the sellers they would get a good deal, raising its offer seven times before settling on the current price of 4500p per share.
The last increase came after the Brexit vote made the pound weaker and led to concerns that SAB was undervalued.
InBev said this was a final offer and there would be no going back.
But there is still opposition from Aberdeen Asset Management, one of SAB’s ten largest shareholders, which branded the deal ‘unacceptable’ and said the company was being sold too cheaply.
Yesterday, Aberdeen said it would vote against it and urged others to follow suit.
The backlash is partly due to a row over the involvement of two institutional investors, tobacco firm Altria and BevCo, the holding company of Colombia’s Santo Domingo family.
Together, they own around 41pc of the company – and unlike the all-cash offer for other shareholders, the pair will be getting a mixture of unlisted AB stock and a small amount of cash.
Critics claim this is favouritism aimed at limiting their tax liabilities. There will be two separate votes on the deal, one for Altria and BevCo and another for ordinary shareholders.
Both groups must pass it before it can go ahead.
Another major hurdle was also cleared yesterday when Chinese regulators waved the bid through on the condition InBev keeps a promise to sell SAB’s stake in Chinese beer joint venture CR Snow.
Competition watchdogs in the EU, US and South Africa have already given it the nod.
Japanese brewer Asahi is buying SAB’s Peroni, Grolsch and Meantime brands for £2bn to secure the deal. SAB does not make any beer in the UK, but its head office in London, which employs 25 people, will be shut and the company shares will no longer be traded on the UK stock market in a blow to the status of the City.
Jobs are likely to be lost elsewhere in the world as InBev will have to squeeze out savings to justify the huge price it has paid.
SAB’s main breweries are based in Prague, the US and Africa.
InBev, which is the world’s biggest brewer of beer, employs 155,000 people, has breweries in 25 countries and sells its products in 100 countries.
It can trace its history back to 1366 when the Den Hoorn brewery was founded in the city of Leuven in Belgium.
This was bought in 1708 by local entrepreneur Sebastian Artois and became the Artois Brewery.
SAB, which started life in 1895 in Johannesburg as South African Breweries, is the world’s number two brewer.
It operates in 80 countries, selling 200 beers and employing 69,000 people. The company was an obvious target for InBev.
Despite its British stockmarket listing and swanky Mayfair headquarters, SAB is the biggest brewing titan in Africa, where InBev is keen to increase its market share.