Three takeover proposals by AB Inbev to SABMiller have failed so far to get talks going
ANHEUSER-Busch (AB) InBev turned up the heat on SABMiller after three takeover proposals failed to get talks going, saying the board’s opposition lacked credibility and shareholders were being offered a price the brewer alone wouldn’t achieve any time soon.
SABMiller’s rejection was not credible because the price of £42.15 (R866.44) a share in cash that most stockholders would receive was 44 percent above where SABMiller was trading before speculation of a deal, Belgium-based AB InBev said yesterday. Also, Altria Group, SABMiller’s largest shareholder, had urged talks over the £65.2 billion potential offer, AB InBev said.
AB InBev is trying to rally support from SABMiller shareholders for the plan, which would combine the world’s two biggest brewers in to one of the biggest acquisitions. A spokesman for SABMiller declined to comment on AB InBev’s statement. SABMiller on Wednesday rejected the approach, saying it “substantially undervalues” the company.
Frustrate process
“The board of SABMiller has refused to meaningfully engage with us,” AB InBev chief executive Carlos Brito said. “If shareholders agree that we should be in proper discussions, they should voice their views and should not allow the board of SABMiller to frustrate this process and let this opportunity slip away.”
AB InBev also disputed SABMiller’s contention that antitrust authorities might block the deal. The target said on Wednesday, when AB InBev announced the details of a potential bid, that the buyer “has not yet provided comfort” to SABMiller that it could get the deal past regulatory hurdles in the US and China.
“Together with its advisers, AB InBev has done significant work on regulatory matters and has identified solutions that provide a clear path to closing,” the Belgian brewer said. “AB InBev has repeatedly offered to share this analysis with SABMiller and its advisers. Each time the board of SABMiller has refused to engage.”
SABMiller gained 0.22 percent to £36.41 at 4.35pm in London. AB InBev dropped 1.17 percent to € 97.50 (R1 478.20). “How long will it be before shareholders see a value above £42 in the absence of an offer from AB InBev?” Brito added.
John Maxwell, the manager of the Ivy International Core Equity Fund in Kansas City, said on Wednesday that there was a chance of a sweetened offer, though there was also a risk the deal would fall apart.
“We’re in SAB largely because we thought there was a chance that this could happen,” he said. “It’s a deal that has been a long time coming, but I think it’s a tough deal to get signed.”
AB InBev did not have “tremendous room” to raise the price, because the cost savings from this purchase would not be as big as in the brewer’s past acquisitions, he said. – Bloomberg