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AB InBev chief urges SABMiller shareholders to push for fresh bid talks AB InBev chief urges SABMiller shareholders to push for fresh bid talks
(34 minutes later)
The chief executive of Anheuser-Busch InBev has urged SABMiller shareholders to telephone the UK brewer’s chairman to press him to enter serious talks after it turned down a $100bn (£65bn) takeover proposal from the world’s biggest beermaker. The chief executive of Anheuser-Busch InBev has urged SABMiller shareholders to telephone the UK brewer’s chairman to press him to enter serious talks after it turned down a $100bn (£65bn) takeover proposal from the world’s biggest beermaker. Carlos Brito said SABMiller’s rejection of three bid proposals meant that its shareholders risked losing out on a valuation that could take the company many years to achieve on its own.
Carlos Brito said SABMiller’s rejection of three bid proposals meant its shareholders risked losing out on a valuation that could take the company many years to achieve on its own. AB InBev, the Belgian-based owner of Budweiser and Stella Artois, went public with its proposed bid in an attempt to force SABMiller’s hand with a week to go until the deadline for a firm offer. If a deal went ahead, it would be the biggest takeover of a UK company, creating a brewing giant that would produce a third of the world’s beer.
AB InBev, the Belgian-based owner of Budweiser and Stella Artois, went public with its proposed bid in an attempt to force SABMiller’s hand with a week to go until the deadline for a firm offer. If a deal went ahead, it would be the biggest takeover of a UK company, creating a brewing giant producing a third of the world’s beer.
AB InBev said it was willing to pay £42.15 a share in cash for SABMiller, which makes Grolsch, Peroni and Coors. It had previously made private approaches to the board, chaired by Jan du Plessis, suggesting a deal at £38 a share and £40 a share.AB InBev said it was willing to pay £42.15 a share in cash for SABMiller, which makes Grolsch, Peroni and Coors. It had previously made private approaches to the board, chaired by Jan du Plessis, suggesting a deal at £38 a share and £40 a share.
The latest proposal would value SABMiller at £68bn. However, AB InBev also proposed a part-share offer aimed at SABMiller’s biggest shareholders, which own 41% of the company. It would be worth 11% less than the proposed offer to other investors, making the potential deal worth £65bn.The latest proposal would value SABMiller at £68bn. However, AB InBev also proposed a part-share offer aimed at SABMiller’s biggest shareholders, which own 41% of the company. It would be worth 11% less than the proposed offer to other investors, making the potential deal worth £65bn.
The two major shareholders, Altria of the US and BevCo, owned by Colombia’s Santo Domingo family, appear to be split on AB InBev’s approach. The two major shareholders, Altria of the US and BevCo, owned by Colombia’s Santo Domingo family, appear to be split on AB InBev’s approach. Altria announced public support for the proposal and told SABMiller’s board to work on a deal. But Brito was forced to backtrack on a claim made early on Wednesday that he expected BevCo to back the proposal. He said he still hoped to get the support of BevCo, which owns almost 14%.
Altria announced public support for the proposal and told SABMiller’s board to work on a deal. But Brito was forced to backtrack on a claim made early on Wednesday that he expected BevCo to back the proposal. He said he still hoped to get the support of BevCo, which owns almost 14%. Brito did not rule out making a hostile bid before the 14 October takeover rules deadline, but he said he still hoped to get SABMiller’s board to support an offer. He said: “We still want to get the recommended deal, but now it’s time for shareholders to pressure the board. If they think they are not going to see this £42.15 any time soon if this deal falls apart because of a lack of engagement, they should call the chairman. The board is the biggest risk in this transaction and that is why it’s important for shareholders to voice their opinions because time is running out.”
Brito did not rule out making a hostile bid before the 14 October takeover rules deadline but he said he still hoped to get SABMiller’s board to support an offer. SAB Miller said its board met on Wednesday and decided unanimously to rebuff AB InBev’s approach. Representatives of Altria, with 27% of the shares did not take part in the vote. 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.”
He said: “We still want to get the recommended deal but now it’s time for shareholders to pressure the board. If they think they are not going to see this £42.15 any time soon if this deal falls apart because of a lack of engagement they should call the chairman.
“The board is the biggest risk in this transaction and that is why it’s important for shareholders to voice their opinions because time is running out.”
SAB Miller said its board met on Wednesday and decided unanimously to rebuff AB InBev’s approach. Representatives of Altria, with 27% of the shares did not take part in the vote.
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 of the proposal sets the scene for further manoeuvring between the companies and shareholders. Brito said the part-share offer was devised “with and for” Altria and BevCo by an unnamed shareholder of AB InBev.The rejection of the proposal sets the scene for further manoeuvring between the companies and shareholders. Brito said the part-share offer was devised “with and for” Altria and BevCo by an unnamed shareholder of AB InBev.
Related: SABMiller 'set to reject' AB InBev offerRelated: SABMiller 'set to reject' AB InBev offer
AB InBev’s latest proposal is 44% more than SABMiller’s closing share price the day before rumours of an impending approach reached the market last month. AB InBev’s latest proposal is 44% more than SABMiller’s closing share price the day before rumours of an impending approach reached the market last month. SABMiller shares edged up 11p, or 0.3%, to close at £36.33 after the company rejected the proposed offer.
SABMiller shares were up 1% to £36.60 after the company rejected the proposed offer.
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 28 days 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 28 days to make a firm offer or walk away unless SABMiller asked for the deadline to be extended.
Brito said his company had considered a bid for SABMiller on and off for years but that in the past year it had done detailed analysis of the beer market in Africa, where SAB Miller is the dominant brewer. It had also learnt that Altria and BevCo might be receptive to an approach, he said. Brito said his company had considered a bid for SABMiller on and off for years but that in the past year it had carried out a detailed analysis of the beer market in Africa, where SAB Miller is the dominant brewer. It had also learnt that Altria and BevCo might be receptive to an approach, he said.
The combined company would be able to sell more brands in different countries, he said. Apart from the US and China, there is little overlap between the two companies’ markets and the deal would be about expansion rather than cost cuts, Brito added. The combined company would be able to sell more brands in different countries, he said. Apart from the US and China, there is little overlap between the two companies’ markets, and the deal would be about expansion rather than cutting costs, Brito added.
AB InBev said the alternative to its cash offer, available to all shareholders but intended for Altria and BevCo, would pay £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 the alternative to its cash offer, available to all shareholders but intended for Altria and BevCo, would pay £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.