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SABMiller dismissive of $100bn takeover offer from AB InBev SABMiller rejects $100bn takeover approach from AB InBev
(35 minutes later)
SABMiller has indicated it will reject a $100bn (£65bn) takeover proposal from Anheuser-Busch InBev after the world’s biggest brewer went public with an increased approach for the UK company. SABMiller has rejected a $100bn (£65bn) takeover proposal from Anheuser-Busch InBev after the world’s biggest brewer went public with an increased approach for the UK company.
The world’s second-biggest brewer said its board met on Wednesday and decided unanimously to rebuff AB InBev’s approach. Altria, SABMiller’s biggest shareholder, which backs AB InBev’s proposal, did not take part in the vote.
With a week to go until a deadline for a firm offer, the Belgian maker of Stella Artois and Budweiser sought to apply pressure to SABMiller by announcing it was willing to pay £42.15 a share in cash for the British brewer, which owns Grolsch, Peroni and Coors.With a week to go until a deadline for a firm offer, the Belgian maker of Stella Artois and Budweiser sought to apply pressure to SABMiller by announcing it was willing to pay £42.15 a share in cash for the British brewer, which owns Grolsch, Peroni and Coors.
That price would value SABMiller at £68bn. However, AB InBev also proposed a part-share offer aimed at SABMiller’s biggest shareholders, owning 41% of the company, worth 11% less than the proposed offer to other investors, making the potential deal worth £65bn.That price would value SABMiller at £68bn. However, AB InBev also proposed a part-share offer aimed at SABMiller’s biggest shareholders, owning 41% of the company, worth 11% less than the proposed offer to other investors, making the potential deal worth £65bn.
AB InBev said it had the support of SABMiller’s biggest shareholder, Altria of the US, for the proposed offer. It was forced to backtrack on a claim that it expected SABMiller’s second-largest shareholder, BevCo, to back the proposal. SABMiller said: “The board, excluding the directors nominated by Altria Group Inc, has unanimously rejected the £42.15 proposal as it still very substantially undervalues SABMiller, its unique and unmatched footprint, and its standalone prospects.”
The rejection sets the scene for further manoeuvring between the companies after AB InBev said it had the support of SABMiller’s biggest shareholder, Altria of the US, for the proposed offer. It was forced to backtrack on a claim that it expected SABMiller’s second-largest shareholder, BevCo, to back the proposal.
If the deal goes ahead, it would be the biggest ever takeover of a UK company and would create a brewing giant producing a third of the world’s beer.If the deal goes ahead, it would be the biggest ever takeover of a UK company and would create a brewing giant producing a third of the world’s beer.
SABMiller said on 5 October, AB InBev’s chief executive, Carlos Brito, put forward a proposed offer at £40 and suggested AB InBev might increase its proposed offer to £42. SABMiller’s board decided that offer would undervalue the company. SABMiller rejected the latest proposal despite its biggest shareholder, Altria, which owns 27%, saying it supported the proposed increase. SABMiller’s board had already rejected the suggestion of a £42 offer made by AB InBev’s chief executive, Carlos Brito, on 5 October.
The UK company said its board would meet to consider the £42.15 proposal but noted that it was barely higher than the earlier approach that it had rejected.
SABMiller said: “It should be noted that the all-cash offer within the new proposal announced today is only £0.15 higher than the £42 proposal considered and rejected on 5 October 2015. The board will, of course, meet formally to consider the £42.15 proposal as soon as practicable and a further announcement will be made thereafter.”
SABMiller gave the latest proposal a cool reception despite its biggest shareholder, Altria, which owns 27%, saying it supported the proposed increase. The proposal was rejected by the board without Altria’s representative taking part.
Altria told SABMiller’s board to get on with talks to finalise a recommended offer. But Colombia’s Santo Domingo family, who own almost 14% of SABMiller through their BevCo company, has not backed the approach, contrary to Brito’s claim that he expected their support.Altria told SABMiller’s board to get on with talks to finalise a recommended offer. But Colombia’s Santo Domingo family, who own almost 14% of SABMiller through their BevCo company, has not backed the approach, contrary to Brito’s claim that he expected their support.
In a statement to the stock exchange, AB InBev said: “AB InBev wishes to clarify that it does not currently have the support of BevCo Ltd. for the proposed combination.”In a statement to the stock exchange, AB InBev said: “AB InBev wishes to clarify that it does not currently have the support of BevCo Ltd. for the proposed combination.”
Related: SABMiller 'set to reject' AB InBev offerRelated: SABMiller 'set to reject' AB InBev offer
The proposed offer is the the third approach AB Inbev has made for SABMiller, having privately proposed bids of £38 a share and £40 a share in cash. The latest approach is 44% more than SABMiller’s closing share price on 14 September, the day before rumours of an impending approach reached the market.The proposed offer is the the third approach AB Inbev has made for SABMiller, having privately proposed bids of £38 a share and £40 a share in cash. The latest approach is 44% more than SABMiller’s closing share price on 14 September, the day before rumours of an impending approach reached the market.
SABMiller shares were up 1% to £36.60 after the company issued its response to AB InBev’s announcement. SABMiller shares were up 1% to £36.60 after the company rejected the proposed offer.
AB InBev said it was disappointed that SABMiller’s board rejected its previous offers without meaningful discussion and that it had made its latest approach public to give shareholders in the UK brewer a chance to consider it.AB InBev said it was disappointed that SABMiller’s board rejected its previous offers without meaningful discussion and that it had made its latest approach public to give shareholders in the UK brewer a chance to consider it.
SABMiller announced on 15 September that AB InBev had approached it about a takeover to create a company worth about $280bn. Under UK takeover rules, AB InBev was given until 14 October to make a firm offer or walk away unless SABMiller asked for the deadline to be extended.SABMiller announced on 15 September that AB InBev had approached it about a takeover to create a company worth about $280bn. Under UK takeover rules, AB InBev was given until 14 October to make a firm offer or walk away unless SABMiller asked for the deadline to be extended.
Brito said: “We had interaction with their board and chairman on a private basis. We were disappointed that they rejected both offers. There was no meaningful engagement with them which is why we thought it was time for the shareholders to get to know what was being discussed.”Brito said: “We had interaction with their board and chairman on a private basis. We were disappointed that they rejected both offers. There was no meaningful engagement with them which is why we thought it was time for the shareholders to get to know what was being discussed.”
AB InBev said it had devised an alternative to its cash offer, available to all shareholders but intended for Altria and BevCo, for payment of £2.37 a share in cash and the rest in a new class of AB InBev shares. SABMiller said this option was worth £37.49 a share and that the shares would be untraded and convertible into ordinary AB InBev shares after five years.AB InBev said it had devised an alternative to its cash offer, available to all shareholders but intended for Altria and BevCo, for payment of £2.37 a share in cash and the rest in a new class of AB InBev shares. SABMiller said this option was worth £37.49 a share and that the shares would be untraded and convertible into ordinary AB InBev shares after five years.
RBC Capital Markets analyst James Edwardes Jones said he believed both companies wanted to strike a deal and that price was the sticking point. “This is not, in our view, intended as ABI’s concluding proposal but it is likely to put pressure on SAB’s management to engage (witness Altria’s comments) and at least there is now a formal proposition to discuss,” he said.RBC Capital Markets analyst James Edwardes Jones said he believed both companies wanted to strike a deal and that price was the sticking point. “This is not, in our view, intended as ABI’s concluding proposal but it is likely to put pressure on SAB’s management to engage (witness Altria’s comments) and at least there is now a formal proposition to discuss,” he said.