By Josh Noble and Scheherazade Daneshkhu and Arash Massoudi in London
SABMiller’s two biggest shareholders are split over Anheuser-Busch InBev’s latest £65bn bid for its main rival, threatening a deal that would create a dominant brewer producing one in three beers drunk globally.
AB InBev, the world’s largest brewer, was forced by the UK’s Takeover Panel to clarify that it does not have the support of BevCo, the holding company of Colombia’s Santo Domingo family which controls a 15 per cent stake in SABMiller.
The clarification came after Altria, the tobacco company and SAB’s largest shareholder with 27 per cent, had earlier voiced its support of AB Inbev’s third proposal.
“Altria supports a proposal of £42.15, or higher, with a partial share alternative and subject to finalisation of terms, would be prepared to elect the partial share alternative,”
SABMiller said that an offer of £42 “very substantially” undervalued the London-listed brewer, but it would
evaluate the slightly higher proposal at a board meeting later on Wednesday.
In a statement to the London Stock Exchange, SABMiller said: “AB InBev needs SABMiller but has made opportunistic and highly conditional proposals, elements of which have been deliberately designed to be unattractive to many of our shareholders.”
AB InBev said it was disappointed with the lack of engagement from its smaller rival and urged its shareholders to persuade the company to accept its latest bid.
The Belgian-Brazilian brewer said it previously had two offers rejected, one at £38 per share, and one at £40. The new offer would value SABMiller, including debt, at £72bn, representing a 44 per cent premium to its share price before the AB InBev made its interest known.
Read also: SABMiller rejects InBev offer, tells bidder its offer is too low
If AB InBev succeeds, it would be the third-largest M&A transaction in history, according to Dealogic.
Shares in SABMiller were up 1 per cent at £36.61 at midday in London while AB InBev shares gained 2 per cent to €100.
The bid by the world’s top beermaker to buy its biggest rival is the most ambitious step yet for AB InBev, which has a long history of acquisitions. AB InBev is seeking to combine its stable of global brands, including Budweiser, Stella Artois and Corona with to SABMiller’s long list of popular emerging market beers.
Carlos Brito, AB InBev chief executive, said: “We didn’t get any meaningful engagement from the board going the private route.
“With the put up or shut up deadline [when AB InBev would have to make a formal bid or withdraw] approaching, we thought it important for SABMiller shareholders to understand . . . it’s an amazing price,” he said.
AB InBev has also added a partial share alternative to the cash offer, where shareholders would receive £2.37 in cash and 0.48 restricted AB InBev shares in return for every SABMiller share. The restricted shares would be subject to a five-year lock-up and would be unlisted.
Due to the lower value of the share offer, AB InBev said it expects most SABMiller shareholders to choose the cash offer.
Mr Brito said the company had held “extensive discussions” with major SAB shareholders such as Altria and BevCo, the holding company of Colombia’s Santo Domingo family. The two companies together own more than 40 per cent of SABMiller.
“The partial share alternative was designed with and for them,” he added.
Phil Carroll, analyst with Shore Capital, said the new offer was a “good deal” for shareholders. “Ultimately we expect a deal to be agreed, although the dance could continue for a while yet.”
Read also: $250bn brewing behemoth: AB InBev targets SABMiller, shares rocket 23%
However, James Edwards Jones, analyst at RBC Capital Markets, said that the cash and share offer worked out at an average of £40.24 per share, “some way below what we would regard as a knockout bid”.
Mainstream beer brands have been increasingly under pressure in developed markets from the rising popularity of craft brews, often made by small independent producers.
AB InBev hopes a deal will help it gain exposure to fast-growing African markets, where SAB has long been the dominant player. The combined group would generate annual revenue of £64bn, and earnings before interest, tax, depreciation and amortisation of £24bn.
AB InBev has retained as advisers Lazard and law firm Freshfields. SABMiller is being advised by Robey Warshaw, JPMorgan Chase, Morgan Stanley and Goldman Sachs. Its lead legal adviser is Linklaters.
(c) 2015 The Financial Times Ltd.
