AB InBev Lifts SABMiller Takeover Proposal to $103.6 Billion
Anheuser-Busch InBev NV raised its proposed takeover bid for SABMiller Plc to about 67.4 billion pounds ($103.6 billion), seeking to bring the London-based brewer to the negotiating table for a deal that would create the world’s dominant beermaker.
Under the proposal, the majority of stockholders would be offered 43.50 pounds a share in cash, Leuven, Belgium-based AB InBev said in a statement Monday. SABMiller’s two biggest investors, Altria Group Inc. and BevCo Ltd., the Santo Domingo family’s holding company, would receive 38.88 pounds a share in cash and stock, AB InBev said.
SABMiller wants AB InBev to pay closer to 45 pounds a share, people familiar with the discussions said late Sunday. The Peroni maker has spurned three previous proposals, the most recent of which AB InBev made public on Oct. 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.
“This new offer is just to get SABMiller to come to the table,” De Wet Schutte, an analyst at Avior Capital Markets in Cape Town, said by phone. “Given the picture SABMiller has been painting of its potential growth, this latest offer may still be a bit light.”
SABMiller didn’t immediately respond to the improved proposal. Chairman Jan du Plessis said Wednesday that AB InBev’s previous offer “substantially” undervalues the company. AB InBev Chief Executive Officer Carlos Brito countered by saying the board’s opposition lacks credibility and shareholders are being offered a price the brewer alone won’t achieve anytime soon.
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 U.K. takeover law, Leuven, Belgium-based AB InBev has until 5 p.m. on Oct. 14 to make a formal offer or it must walk away. If it doesn’t bid it can’t renew its takeover effort for six months.
SABMiller’s investors around the globe are now choosing sides in the industry’s biggest-ever deal. Altria Group Inc. -- the biggest shareholder, with a 27 percent stake -- supports AB InBev’s current proposal. An investment banker close to Colombia’s Santo Domingo family, which controls 14 percent, said SABMiller has better growth prospects than its larger suitor. On Friday, two big institutional shareholders backed SABMiller’s rejection.
The revised proposal changes little, said Javier Gonzalez Lastra, an analyst at Berenberg.
“If the board said the last proposal substantially undervalued the company, you have to wonder how much a 3 percent increase is going to change their position," he said.
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