AB InBev Slams SABMiller's Rejection
October 08 2015 - 7:04AM
Dow Jones News
By Saabira Chaudhuri
LONDON--Anheuser-Busch InBev publicly slammed SABMiller PLC
Thursday for rejecting its latest proposal to buy the world's
second-largest brewer in a complicated cash-and-stock deal that the
Belgian-based brewer insists is a good one for shareholders.
AB InBev on Wednesday made public its proposal to buy SABMiller
for GBP42.15 ($64.57) in cash and offered what it called a partial
share alternative for 41% of shares, which translates into a
combination of stock and cash that has a combined lower value of
GBP37.49. If SABMiller were to agrees to the proposal, AB InBev
will end up paying GBP65.14 billion for SABMiller. The proposal has
the support of SABMiller's largest shareholder, Altria Group
Inc.
SABMiller in response said the offer "still very substantially
undervalues SABMiller, its unique and unmatched footprint, and its
stand-alone prospects." Its board--excluding the directors
nominated by Altria--rejected the proposal, which AB InBev said was
the third it had made in recent days.
Thursday, AB InBev Chief Executive Carlos Brito turned up the
heat on SABMiller by directly addressing shareholders in a
statement. "How long will it be before shareholders see a value of
over GBP42 in the absence of an offer from AB InBev?" he wrote. "If
shareholders agree that we should be in proper discussions, they
should voice their views and should not allow the Board of
SABMiller to frustrate this process and let this opportunity slip
away."
SABMiller didn't immediately respond to a request for
comment.
AB InBev said it is "surprised" that SAB's board, excluding the
three directors nominated by Altria, continues to say that the
proposal undervalued SAB significantly, adding that the claim
"lacks credibility."
The world's largest brewer noted that the cash part of the offer
represents a 44% premium to SABMiller's closing price on Sept. 14,
the day before media speculation about a possible deal
surfaced.
It added that it has the support of Altria, whose stake of more
than 25% makes it SABMiller's largest shareholder. AB InBev also
responded to the SABMiller board's Wednesday statement that the
proposals were "highly conditional" and that AB InBev hadn't yet
provided it with comfort about the regulatory hurdles in China and
the U.S.
"Together with its advisers, AB InBev has done significant work
on regulatory matters and has identified solutions that provide a
clear path to closing," said the brewer in a statement.
The biggest regulatory hurdle for a deal between the world's two
largest brewers is likely to be the U.S., where AB InBev already
has a roughly 45% market share and London-based SABMiller controls
a further 25% through its MillerCoors LLC joint venture with Molson
Coors Brewing Co.
Another potential regulatory headache is China, where AB InBev
had a 14% market share last year, according to Euromonitor. Chinese
authorities could require the brewer to exit SABMiller's joint
venture with China Resources Enterprise Ltd., which controls 23% of
the market and produces the top-selling Snow brand.
"AB InBev intends to work proactively with regulators to resolve
any concerns," said the company in its statement.
SABMiller's shares were up 0.3% in recent trading.
Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
October 08, 2015 06:49 ET (10:49 GMT)
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