AB Inbev tables new £67.4bn SABMiller bid
ANHEUSER-BUSCH (AB) InBev yesterday raised its proposed bid for SABMiller to about £67.4 billion (R1.375 trillion), seeking to bring the UK brewer to the negotiating table ahead of tomorrow’s deadline for an offer that would create the world’s dominant brewer.
Under the proposal, the majority of stockholders would get £43.50 a share in cash, Belgium-based AB InBev said. SABMiller’s two biggest investors, Altria and BevCo, the Santo Domingo family’s holding company, would receive £38.88 a share in cash and stock, AB InBev said.
SABMiller wanted AB InBev to pay closer to £45 a share, people familiar with the discussions said late on Sunday.
The Peroni maker has spurned three previous proposals, the most recent of which AB InBev made public on October 7. The back-and-forth follows a contentious week for the world’s two biggest brewers, who between them control half of the industry’s profit pool from brands such as Grolsch, Peroni, Stella Artois and Bud Light.
Interesting
“They are getting closer to the price that could be interesting,” said Pietro Cirenei, a fund manager at Soprarno SGR in Milan.
“For shareholders, £45 is surely a more interesting price. Somewhere around £45 is what would more or less make everyone agree.”
The cash proposal is 48 percent higher than the brewer’s closing price on September 14, the day before speculation of a deal.
SABMiller did not immediately respond to the improved proposal, and its board was meeting in London to discuss it, people familiar with the matter said. Chairman Jan du Plessis said last week that AB InBev’s previous offer “substantially” undervalued the company.
AB InBev chief executive Carlos Brito countered by saying the board’s opposition lacked credibility and shareholders were being offered a price the brewer alone would not achieve any time soon.
“I think we’re approaching the final price for what they are willing to do,” said John Maxwell, the manager of the Ivy International Core Equity Fund in Kansas City.
AB InBev wants SABMiller’s exposure to emerging markets in Latin America and Africa, while SABMiller is trying to maintain its independence, and sought to rally shareholders around its refusal to enter talks by doubling a target of planned cost savings. Under UK takeover law, AB InBev has until 5pm London time tomorrow to make a formal offer or it must walk away. If it does not bid, it cannot renew its takeover effort for six months. “This new offer is just to get SABMiller to come to the table,” said De Wet Schutte, an analyst at Avior Capital Markets in Cape Town.
“Given the picture SABMiller has been painting of its potential growth, this latest offer may still be a bit light.”
SABMiller’s investors around the globe are now choosing sides in the industry’s biggest deal. Altria – the biggest shareholder, with a 27 percent stake – supported AB InBev’s previous proposal.
An investment banker close to Colombia’s Santo Domingo family, which controls 14 percent, said SABMiller had better growth prospects than its larger suitor.
SABMiller shares lost 2.41 percent to R732 on the JSE yesterday.
Given the picture SABMiller has been painting of its growth, the offer may be a bit light.