SABMiller rejected Anheuser-Busch InBev’s £65.2-billion takeover proposal as too low, putting it in conflict with its biggest shareholder, which urged the brewer to support the overture.
As with previous offers from the maker of Budweiser, this one had two tiers: AB InBev would pay £42.15 a share in cash for a majority of the stock. The price is 44 per cent above SABMiller’s closing level on 14 September, the day before renewed speculation about a deal. AB InBev proposes paying £37.49 a share in cash and stock for the stakes held by SABMiller’s two biggest shareholders, the potential acquirer said.
AB InBev’s approach, made public Wednesday after two weeks of closed-door discussions, raises the stakes in the back-and-forth battle over combining the world’s two largest beermakers. A merger would create a beverage empire controlling the number-one or -two positions in 24 of the world’s 30 biggest beer markets, according to Exane BNP Paribas.
The deal, if it goes through, may end up being the fourth-biggest acquisition of all time, according to data compiled by Bloomberg.
"This is not, in our view, intended as ABI’s concluding proposal," said James Edwardes Jones, an analyst at RBC Capital Markets, "but it is likely to put pressure on SAB’s management to engage, and at least there is now a formal proposition to discuss."
SABMiller’s largest shareholder, Altria Group, with a 27-per-cent stake, said in a statement that it supported the approach. Altria urged London-based SABMiller’s board to engage in talks “promptly” with AB InBev.
SABMiller, the world’s number-two beermaker, has already rejected two proposals made privately, of £38 a share and £40 a share, AB InBev said. Under UK takeover law, Leuven, Belgium-based AB InBev has until 14 October to make a formal offer or it must walk away, and if it doesn’t bid, it can’t renew its takeover effort for six months.
SABMiller’s board, excluding representatives of Altria, said in a statement Wednesday that the proposal “substantially undervalues” the brewer.
“We continue to work towards a recommended transaction, it’s just that after a couple weeks trying the private route, we didn’t get any meaningful engagement from the board and with the deadline approaching, we felt it was important for SABMiller shareholders to understand the compelling opportunity and look at our proposal,” AB InBev chief executive officer Carlos Brito said on a conference call.
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