SABMiller to Consider Sterling's Strength in Deal Review
July 21 2016 - 12:00PM
Dow Jones News
LONDON—SABMiller PLC's board will take into consideration
sterling's devaluation following the U.K.'s vote to leave the
European Union when making its final recommendation over a roughly
$108 billion tie-up with Anheuser-Busch InBev NV, its chairman Jan
du Plessis said at the company's annual general meeting
Thursday.
"I think it's one of many things we need to take into
consideration," Mr. du Plessis said in response to a shareholder
query over whether the pound's devaluation has altered the
attractiveness of the offer.
"When the board makes its decision, we will take into
consideration all the facts, circumstances and issues we think
needs to go" into a recommendation, Mr. du Plessis said. "I just
want to give you the assurance that we will consider that as
well."
The board plans to review its recommendation once the deal
passes its final regulatory hurdle—China. The board will then
consider all factors before making a final recommendation to be
included in the shareholder's document that will be circulated
ahead of a coming vote.
When the deal was struck in November, AB InBev agreed to pay £
44 ($58) a share for a majority of SABMiller. For 41.6% of
SABMiller's stock, AB InBev created a partial-share alternative,
essentially a combination of cash and unlisted stock, that
translated into a lower per-share price of £ 41.85.
The alternative was devised for SABMiller's two largest
shareholders, Altria Group Inc. and the Santo Domingo family's
investment vehicle BevCo, to secure their backing in return for
helping them with taxation and potential accounting issues.
However, because AB InBev's stock trades in euros—a currency
that has risen 8.4% over the past month against the pound—those
shares have become more valuable.
As of July 18, the partial-share alternative was worth about £
49.63, or 13% more than the cash offer, according to Stifel
Nicolaus & Co. The difference between the all-cash and
partial-share offers increases the likelihood that certain
shareholders might call on AB InBev to sweeten the cash offer.
Mr. du Plessis declined to comment further, citing takeover
panel rules. He did however, acknowledge that the board debated
over whether the two-track offer discriminated against any of SAB's
shareholders.
The board canvassed institutional shareholders who acknowledged
the alternative offer to only two of its shareholders wasn't fair.
Still, they said the board made the right decision by accepting the
dual-track offer if it was deemed necessary to allow the remaining
shareholders to benefit from the £ 44 a share cash offer. The offer
represents a 50% premium to SAB's share price on Sept. 14, the day
before media speculation about the deal emerged.
Mr. du Plessis acknowledged there would be a lot of job losses
as a result of the deal but that sometimes tough decisions need to
be taken.
Write to Alex MacDonald at alex.macdonald@wsj.com and Tripp
Mickle at Tripp.Mickle@wsj.com
(END) Dow Jones Newswires
July 21, 2016 11:45 ET (15:45 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
Altria (NYSE:MO)
Historical Stock Chart
From Mar 2024 to Apr 2024
Altria (NYSE:MO)
Historical Stock Chart
From Apr 2023 to Apr 2024