Miller time, the fourth time
AB InBev has made a fourth takeover approach for rival brewer SABMiller in its battle to create a beer powerhouse
AB InBev has made a fourth improved takeover approach for rival brewer SABMiller in its battle to create a powerhouse that would produce one in three of the beers produced globally.
InBev, the brewer of Budweiser and Stella, said yesterday it could offer £67m, or £43.50 a share in cash, for the FTSE 100 company behind Peroni and Grolsch. This is 3.2 per cent higher than its last rejected bid of £42.15 a share, and 14 per cent above an initial £38 a share offer last month.
However, SAB shares fell 47p to 3,621p yesterday, as analysts said they were not convinced the price is high enough to persuade the board and key investors to welcome it. “The last reaction from SAB was that the previous offer was significantly undervaluing it,” Morningstar’s analyst Phil Gorham said. “The latest offer is not a significant improvement.”
InBev’s fourth proposal again includes a partial-share alternative for 41 per cent of the stock, aimed at SAB’s two largest shareholders, the US tobacco group Altria and the Colombian Santo Domingo family ( see box).
This too was sweetened, with the cash component rising from £2.37 to £3.56, making it worth about £38.83 last night. So far, the Santo Domingo family have been silent on InBev’s offer, though Altria has backed the proposal in principle.
InBev has until 5pm tomorrow to table a formal offer or walk away from SAB for at least six months under the City’s Takeover Panel’s rules.
However, if SAB’s board agrees, the pair could ask the panel for an extension while they carry out talks over a potential agreed bid. SAB’s board was last night meeting about the latest offer.
Analysts at Evercore ISI added: “We think the most
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The increased bid has not inspired much investor confidence
likely scenario is the increased proposal brings SAB’s board more meaningfully to the negotiating table and SAB’s board will ask for an extension [to the deadline].”
Tensions between the rival brewers have increased since it emerged last month that InBev had approached SABMiller about a deal that could create a colossus in the world’s drinks industry.
InBev has accused its rival’s board of failing to engage meaningfully in negotiations, but the latter has argued that the previous offers underval- ues the company. In a charm offensive in the City last week, SAB defended itself against the takeover, saying it would double the cost savings it had flagged for the next five years.
Institutional investors also came out behind the board’s decision to snub the previous offer, with Poland’s Kulczyk Holdings saying that it saw “strategic merit” in a deal, but the £42.15 proposal did “not reflect SAB’s standalone growth potential”.
Devan Kaloo, Aberdeen Asset Management’s head of global emerging markets equities, said on Friday: “The bid is opportunistic and Aberdeen will not support the current offer – AB InBev need to rethink their numbers.”
If the companies did tieup, it would combine InBev’s dominance in Latin America with SABMiller’s Africa presence, where it is the market leader in 15 countries. It would also strengthen both their grips on the lucrative South American market.
It is likely a combined group would have to sell off major businesses in the US and China to get a deal past regulators.
Michael Hewson, the chief market analyst at CMC Markets UK, said the increased bid did not “appear to have inspired much investor confidence that we will see an agreement by the Wednesday cut-off date, if today’s share price reaction is any guide, as investors give the new offer a big ‘meh’.”