SABMiller Pauses Integration Work With Anheuser-Busch InBev -- Update
July 27 2016 - 01:30PM
Dow Jones News
By Saabira Chaudhuri
LONDON -- SABMiller PLC has paused its integration work with
Anheuser-Busch InBev NV, according to a person familiar with the
matter, as the London-based brewer's board consults with
shareholders over whether the revised offer AB InBev broached on
Tuesday is acceptable.
The pause in integration didn't necessarily signal that the
SABMiller board would oppose the new offer. Still, news of the halt
worried investors, sending AB InBev shares down 2.3% in recent
trading in Brussels. SABMiller shares were down 0.7% in London.
In the spring, SABMiller had begun working with AB InBev on
integrating finance, technology, procurement and certain
supply-chain functions, the person said, but the company on Tuesday
decided to halt this work after AB InBev said its revised offer for
SABMiller was final.
SABMiller's board is now consulting with shareholders and plans
to meet to consider the revised offer before making a final
recommendation. The board will consider a range of factors,
including how the pound's weakness has eroded the all-cash portion
of the deal's premium and what SABMiller's valuation would be if
the AB InBev bid falls through, the person familiar with the matter
said.
A decision by SABMiller's board could come within days, the
person said.
Belgian-based AB InBev boosted its cash offer to GBP45 ($59.12)
a share from GBP44 a share to appease SABMiller shareholders, who
had watched the value of the offer fall along with sterling. The
pound sank after the June 23 vote by Britain to leave the European
Union.
That sterling decline has deflated the value of AB InBev's
cash-only offer, intended for most shareholders, compared with a
separate cash-and-shares offer aimed at SABMiller's two biggest
stockholders: U.S. cigarette maker Altria Group Inc. and Colombia's
Santo Domingo family.
Aberdeen Asset Management, a large SABMiller shareholder, on
Tuesday characterized AB InBev's revised offer as "unacceptable,"
following the drop in the pound, saying the deal unfairly favors
investors who can opt for the cash and stock offer.
But other SABMiller shareholders, such as New York-based
investment-management firm Twin Capital Management LLC, said they
want to the deal to go through. "I think people are being too
shortsighted," said Twin Capital Chief Executive David Simon in an
interview on Wednesday. Mr. Simon, who said his firm owns more than
a million shares of SABMiller, characterized AB InBev's offer as
"fair."
Another large SABMiller shareholder, South Africa's Public
Investment Corp. -- Africa's largest pension-fund manager -- in an
emailed statement said it is "still in discussions with SABMiller
on the offer price." It declined to make its view public at this
point.
Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com
(END) Dow Jones Newswires
July 27, 2016 13:15 ET (17:15 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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