SABMiller Plc has suspended work on integrating the brewer’s operations with that of suitor Anheuser-Busch InBev NV, potentially throwing the industry’s biggest deal ever into disarray.
SABMiller Chief Executive Officer Alan Clark told employees “there should be no contact with AB InBev with immediate effect,” while a new offer is reviewed, according to a memo seen by Bloomberg. Convergence planning is paused, and all meetings and calls between the companies should be postponed until further notice, the memo shows.
The same applies to contact with representatives of Asahi Group Holdings Ltd. and Molson Coors Brewing Co., according to the memo, both of which are buying assets from the brewers as part of the deal.
Representatives for AB InBev and SABMiller declined to comment.
The revelation came a day after AB InBev nudged its cash bid for the British brewer up to 79 billion pounds ($103.6 billion) to account for the pound’s plunge in the wake of U.K.’s vote last month to leave the EU. That followed pressure from investors who said the deal was unacceptable because stockholders weren’t being treated equally. The acquisition is in the home stretch, receiving regulatory clearance from South Africa and the U.S. in recent weeks, and now risks becoming an unintended casualty of Brexit.
SABMiller’s board is still reviewing AB InBev’s improved offer and has not decided to walk away from the deal, different people familiar with the matter said. Advisers to the two brewing companies are still working on the transaction, the people said.
The development sent shares of Molson Coors down as much as 8.9 percent. The U.S. brewer is set to acquire SABMiller’s stake in the MillerCoors brewing venture, and is still awaiting approval from Chinese regulators. SABMiller’s American depositary receipts fell 4.6 percent. The news came after European markets closed.
Remains Unacceptable
Under the new terms, SABMiller shareholders would receive 45 pounds a share in cash, 1 pound more than the prior offer. The bidder also increased the amount of cash in a cash-and-stock alternative that it crafted for the two largest investors, Altria Group Inc. and Bevco Ltd. Another SABMiller holder, Aberdeen Asset Management, said the revised proposal undervalues the company and is unacceptable because stockholders are receiving different treatment. The value of the cash-and-stock option has soared from 39 pounds when the deal was announced last year to about 50 pounds.
SABMiller said Tuesday that its board would consult shareholders about AB InBev’s new offer and make an announcement thereafter. Altria and Molson Coors declined to comment.
The deal to merge SABMiller and AB InBev, called “Megabrew” by analysts, would create a behemoth controlling about half of the industry’s profits. The combined company will have the No. 1 or No. 2 positions in almost all of the world’s biggest beer markets, and provide AB InBev its first toehold in Africa, where about 65 million people are due to reach the legal drinking age by 2023.
News by Bloomberg, edited by ESM. To subscribe to ESM: The European Supermarket Magazine, click here.
