AB InBev Makes Revised Proposal to Buy SABMiller -- 2nd Update
October 07 2015 - 3:45AM
Dow Jones News
By Saabira Chaudhuri
LONDON--Anheuser-Busch InBev NV turned the heat up on SABMiller
PLC by going public with a proposal it has made to the world's
second-largest brewer's board to buy it in a deal valuing it at up
to GBP68.24 billion ($104.1 million).
AB InBev said it is proposing a price of GBP42.15 a share, with
a partial share alternative available to SABMiller's largest
shareholders, and revealed that the latest proposal is the third it
has made to the company's board.
AB InBev said SABMiller had rejected two previous proposals. But
in a separate release Wednesday, SABMiller's biggest shareholder
said it was satisfied with the latest offer, adding pressure to the
London-listed brewer's management.
The cash proposal represents a premium of approximately 44% to
SABMiller's closing share price of GBP29.34 on Sept. 14, the day
before speculation about an approach from AB InBev arose.
AB InBev said the share alternative is available for Altria
Group Inc. and the Santo Domingo family, which holds roughly 41% of
SABMiller's shares. The structure would allow AB InBev to get
financing and support the cash offer at a higher price than the
brewer would otherwise be able to offer, and give tax relief to
Altria and the Santo Domingos, which has been a key issue during
negotiations so far.
Under U.K. takeover rules, SABMiller has until 5 p.m. on Oct. 14
to announce a "firm intention" to make an offer for SABMiller and
specify the details of the offer. Wednesday's proposal doesn't
constitute a firm intention to make an offer, said AB InBev,
cautioning that there is no certainty that an offer will be
made.
AB InBev said it has made two prior written proposals in private
to SABMiller, the first for GBP38 a share in cash and the second
for GBP40 a share.
"AB InBev is disappointed that the board of SABMiller has
rejected both of these prior approaches without any meaningful
engagement," said the brewer. "AB InBev believes that the revised
cash proposal of GBP42.15 a share is at a level that the board of
SABMiller should recommend."
SABMiller didn't immediately respond to requests for
comment.
Wednesday's statement marks a change in tone from AB InBev,
which when talks were first disclosed said its "intention is to
work with SABMiller's board toward a recommended transaction."
Representatives of AB InBev didn't respond to requests for
comment.
Altria in its own statement said it supports a deal with AB
InBev at GBP42.15 a share "or higher" with a partial share
alternative, saying this "would create significant value for all
SABMiller shareholders." The tobacco giant, which is SABMiller's
largest shareholder, said it would be prepared to elect the partial
share alternative.
"Altria urges SABMiller's board to engage promptly and
constructively with AB InBev to agree on the terms of a recommended
offer."
A tie-up between the two beer companies would bring household
brands such as Budweiser, Corona and Stella Artois together with
Pilsner Urquell, Grolsch and Peroni, and give the combined company
a major presence in the U.S., China, Europe, Africa and Latin
America. Together, AB InBev and SABMiller sell over 30% of the
world's beer volumes.
Such a deal has been rumored for years, and has been described
by some analysts as the last major piece of consolidation that
remains in the beer industry. Research firm Euromonitor has
estimated that the combined company's market share would be 29%
after the deal after likely divestments, giving it a
20-percentage-point lead over the next biggest brewer, Heineken
NV.
SABMiller on Tuesday brought forward a trading statement
originally slated for Oct. 15, a move that was intended to give its
shareholders information ahead of a formal proposal being made by
AB InBev.
Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
October 07, 2015 03:30 ET (07:30 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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