AB InBev ups SABMiller offer to £79bn after sterling drop
Anheuser-Busch InBev, the world’s biggest brewer, has raised its takeover offer for rival SABMiller to £79bn after investors raised concerns about the terms of the deal following a steep drop in the value of sterling.
In a statement on Tuesday, AB InBev said each SABMiller shareholder will be entitled to £45 a share in cash — or a mostly stock alternative now worth £51.14 which will not be tradeable for five years.
SABMiller shares rose 0.6 per cent to £44.67 in the opening hour of trading in London, while AB InBev edged up 0.3 per cent.
The new terms represent an increase of £1 a share on the cash offer and an increase of around 88p a share on the stock alternative that were agreed in principle between the two global brewing giants in November last year.
AB InBev declared its revised offer “final”, a critical term in UK takeovers meaning it will not be able to raise its offer again.
SABMiller said in a separate statement on Tuesday that its chairman, Jan du Plessis, spoke with his counterpart at AB InBev, Olivier Goudet, last Friday about the takeover “in light of recent exchange rate volatility and market movements”. However, it said that they did not discuss or agree the terms of the new offer.
SABMiller added that it had brought on Centerview Partners, an advisory firm, to provide additional financial advice. The company said it would consult with shareholders to review the revised offer, and that a further announcement would be made thereafter.
AB InBev’s decision to alter its offer follows weeks of complaints from investors over the original terms of the complex agreement.
Hedge fund managers including Elliott Management, TCI and Davidson Kempner had been arguing that the mostly stock alternative — which will consist of shares in AB InBev’s that will not trade publicly for five years — was designed to appeal to SABMiller’s large shareholders Altria, the US tobacco company, and BevCo, the investment vehicle of the Santo Domingo brewing family.
Altria and BevCo own about 40 per cent of SABMiller, and the share alternative was created to encourage them to support a deal as it would minimise their tax liability from an AB InBev takeover.
Meanwhile, the fall in sterling following the UK’s vote to leave the EU has widened the gap in value between the two choices, with the cash option more than 16 per cent lower in value for shareholders as of Monday.
The Financial Times first reported last week that Elliott had written to the board of SABMiller to raise its concerns.
On Monday, Martin Gilbert, chief executive of one of SABMiller’s shareholders, Aberdeen Asset Management, said his company was “leading the charge” in putting pressure on the brewers to revise the terms of the deal.
On Tuesday, however, Aberdeen said the revised deal “remains unacceptable as it both undervalues the company and continues to favour SABMiller’s two major shareholders”.
AB In Bev’s revised offer comes earlier than many investors had expected.
Last week, Mr du Plessis told SABMiller investors that the South African brewer would review the terms of AB InBev’s bid and “take into consideration all relevant facts and circumstances” — but only after the proposed takeover was cleared by Chinese authorities.
Speaking at the company’s annual shareholder meeting in London, Mr du Plessis said that SABMiller was “still waiting for the precondition in relation to China” and would “look at the transaction as a whole” once those approvals were received.
AB InBev’s takeover of SABMiller has already been given the greenlight in more than 20 jurisdictions, including the EU, which cleared the merger in May but stipulated that AB InBev must sell SABMiller’s entire beer business in Europe.
Last week, US antitrust regulators also approved the deal, after AB InBev agreed to divest SABMiller’s entire US business, including its stake in MillerCoors