Anheuser-Busch InBev raised its bid for British brewer SABMiller Plc to £79 billion, responding to investor concerns about the deal’s structure after the UK's vote to exit the European Union prompted a slump in sterling.
SABMiller shareholders will be entitled to receive £45 pounds a share in cash, £1 more than the prior offer, AB InBev said in a statement Tuesday. ABI also increased the amount of cash for shareholders who choose a cash-and-stock alternative.
By sweetening the offer, the world’s biggest brewer addressed concerns from investors including Elliott Management and Davidson Kempner Capital Management that the deal was less attractive in the wake of the pound’s fall. SABMiller Chairman Jan du Plessis spoke with AB InBev Chairman Olivier Goudet on July 22 about its offer, SABMiller said in a separate statement. That conversation came the day after SABMiller’s annual meeting, at which du Plessis said he would wait until Chinese regulators approved the takeover before weighing its terms.
Bryan Garnier analyst Nikolaas Faes said he was “amazed” at “how easy AB InBev management is giving in to the handful of funds that have been trying to squeeze out some additional cash, without taking any risk from their part.” Duncan Fox, an analyst at Bloomberg Intelligence, said “the raised offer shows how much ABI wants to complete the deal.”
Investors who opt for the cash-and-stock alternative now will receive about £4.66 in cash compared with £3.78 pounds previously. That offer, valued at about £39 a share when the acquisition was announced last year, had surged to more than £50 recently. With the increased cash, the new offer is worth about £51.14 a share, based on Monday’s stock price.
AB InBev designed the alternative offer as a way to reduce taxes for SABMiller’s two largest shareholders, Altria Group Inc. and Bevco Ltd.
SABMiller also said it hired Centerview Partners last week for financial advice, joining a cadre of advisers that includes Robey Warshaw, JPMorgan Chase & Co., Morgan Stanley and Goldman Sachs & Co. SABMiller’s board had unanimously recommended the previous offer from the maker of Budweiser beer, in what would be the industry’s biggest-ever deal.
SABMiller shares rose 0.4 per cent to #44.57 in early London trading. The new cash-and-shares alternative is about £4.66 plus 0.483969 restricted shares for every SABMiller share. That value doesn’t include a discount for the fact that the stock issued in the deal can’t be traded for five years, AB InBev said. Its revised offer is final, the Belgian company said. AB InBev rose 0.3 per cent.
“Some of these activist positions would have been taken a few weeks ago, so from an opportunistic point of view, the increase is already a juicy return,” Javier Gonzalez Lastra, an analyst at Berenberg, said by phone. “The question is whether they think they will be able to extract more from ABI. It’s a negotiation at the end of the day.”
SABMiller said its board will study the new offer and comment thereafter.
News by Bloomberg, edited by Hospitality Ireland