AB InBev tipped to sweeten offer for SABMiller as deadline looms

(Bloomberg) — Anheuser-Busch InBev NV has discussed raising its takeover bid for SABMiller Plc to about 43 pounds ($66) a share, still below the target company's desired price and leaving the two sides at odds days before a deadline expires for a formal offer, people familiar with the discussions said.

U.K. brewer SABMiller wants AB InBev to pay a price closer to 45 pounds a share, said the people, who asked not to be identified as the discussions aren't public. SABMiller, which hasn't entered formal talks with AB InBev because it views the proposed bid of 42.15 pounds as too low, must agree to a deal or seek an extension by 5 p.m. on Oct. 14 or else the transaction risks falling apart. AB InBev has yet to agree on whether to raise its offer, one of the people said. Representatives from both companies declined to comment.

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. SABMiller Chairman Jan du Plessis said Wednesday that AB InBev's proposal "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 Oct. 14 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 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.