London-based brewer SABMiller has paused integration planning with Budweiser owner Anheuser-Busch InBev while it reviews its US suitor’s improved takeover offer.
AB InBev, the world’s largest brewing company, raised its offer for SABMiller on Tuesday, to £45 a share from the £44 announced in November. The revised offer, which AB InBev described as final, values the FTSE 100 firm at £79bn, up from £71bn.
The improved offer came after a sharp decline in the value of the pound since Britain’s vote to leave the European Union in late June. Sterling has tumbled 13% against the dollar.
The two companies agreed a deal in November after months of negotiations. Since then, they have been drawing up plans how to integrate the two businesses, in the areas of finance, IT and procurement.
It is understood that work has been halted while SABMiller’s board reviews the revised offer. The brewer’s chairman, Jan du Plessis, has been clear that the board wants to listen to the views of shareholders before making a decision.
The merger would create a brewing giant that supplies nearly a third of the world’s beer and would be the biggest foreign takeover of a British company. SABMiller owns beer brands including Fosters, Miller Genuine Draft, Castle Lager and Pilsner Urquell; while AB InBev also makes Stella Artois, Corona, Beck’s and Hoegaarden.
SABMiller confirmed that Du Plessis had a telephone conversation with his counterpart at AB InBev, Olivier Goudet, last Friday to discuss the terms agreed in November in light of the pound’s tumble. There was no discussion or agreement about the revised offer, however.
A number of activist shareholders, such as hedge funds Elliott Capital Advisors and The Children’s Investment Fund, have been putting pressure on SABMiller to seek better terms.
AB InBev has also amended the terms of its share-and-cash alternative to appeal to SABMiller’s two biggest shareholders, tobacco firm Altria and Bevco, controlled by Colombia’s Santo Domingo family, which together own 40% of SAB. The cash element has been increased to £4.66 from £3.78.
Aberdeen Asset Management, a major SABMiller shareholder, declared the new terms “unacceptable”, arguing they both undervalued the company and continued to favour the company’s two major shareholders. The cash-and-shares alternative is worth £51.14 to those willing to hold AB InBev shares for five years, but many investors cannot accept such lock-ups.
SABMiller has asked Centerview Partners to provide additional financial advice alongside its existing advisers. The brewer said on Tuesday: “The board will continue to consult with shareholders and will meet in due course formally to review, having regard to all facts and circumstances, the revised offer, and a further announcement will be made thereafter.”
The deal still needs to be cleared by anti-trust regulators around the world.
In April, AB InBev agreed to sell SABMiller brands Peroni and Grolsch to Japanese brewer Asahi for €2.55bn (£2.13bn), along with London’s Meantime brewery, to help ease regulatory concerns over the merger. The deal is dependent on the completion of the SABMiller takeover.
Asahi’s offer includes the Peroni, Grolsch and Meantime brands, as well as SABMiller’s Italian, Dutch and British operations that make and distribute the brands. It also includes the global rights to the Grolsch, Peroni and Meantime brands, except in the US.
