Anheuser-Busch InBev has offered to buy SABMiller for about £68.2 billion (€92.5 billion), seeking to combine the world’s two largest brewers in a record industry deal after SABMiller spurned two previous proposals made privately.
The Budweiser maker is willing to pay £42.15 a share in cash for its nearest competitor, whose brands include Peroni and Grolsch.
The price is 44 per cent above London-based SABMiller’s closing level on 14 September, the day before renewed speculation about a deal, AB InBev said in a statement Wednesday. SABMiller rejected two prior offers of £38 pounds a share and £40 a share, the Belgium-based company said.
“AB InBev is disappointed that the Board of SABMiller has rejected both of these prior approaches without any meaningful engagement,” AB InBev said. SABMiller’s largest shareholder, Altria Group Inc., said in a separate statement it supports the approach and urged SABMiller’s board to engage “promptly” with AB InBev.
After years of speculation, the approach was hastened by the impact of slowing economies in the emerging markets of China and Brazil and after a decade of consolidation in the industry eliminated smaller targets. A 20 per cent drop in SABMiller shares in the months preceding AB InBev’s approach and the prospect of an end to cheap credit also served as catalysts.
The proposal includes an alternative that would allow shareholders to take a mix of cash and stock, thus reducing the tax hit that would come from selling for cash. Most SABMiller shareholders will accept the cash offer, since the cash-and- stock mix has a lower value of £37.49 a share, AB InBev said. Altria said it would be prepared to accept the partial share alternative.
SABMiller rose 2.6 per cent to £37.18 at 8:10am in London. AB InBev gained 2.8 per cent to €100.80.
"This is not, in our view, intended as ABI’s concluding proposal," said James Edwardes Jones, an analyst at RBC Capital Markets. "But it is likely to put pressure on SAB’s management to engage and at least there is now a formal proposition to discuss."
The offer price would be compelling for SABMiller’s public shareholders while providing a continuing attractive investment for Altria and the family of Alejandro Santo Domingo, among the richest clans in Colombia and the owner of a 14 per cent stake in SABMiller, AB InBev said.
The transaction would be the biggest of 2015 - already a bumper year for dealmaking - and the fourth-largest takeover ever, according to data compiled by Bloomberg.
News by Bloomberg, edited by ESM. To subscribe to ESM: The European Supermarket Magazine, click here.
