SABMiller has recommended the latest takeover offer from Anheuser-Busch InBev for GBP44 per share.
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SABMiller’s two largest shareholders ─ Altria and BevCo (the family holding of the founders of Bavaria Brewery, sold to SABMiller in 2011) ─ between them hold 40.5% of SABMiller. Altria had previously said it was minded to accept an earlier, lower proposal.
SABMiller shares were up 8.9 percent at 0720 GMT, while AB InBev’s were 3.8 percent higher. AB InBev said it will pay for the cash part of the deal through its internal resources and issuing new debt.
AB InBev agreed to pay a fee of $3bn if it fails to get approval from regulators and shareholders for the purchase.
The offer is still preliminary at this stage.
The current deal comes a day before the October 14 deadline by which AB InBev had to make a formal bid, and the two firms now have until October 28 to finalize terms.
“There is a chance that due diligence throws up something nasty”, he said, but added that SABMiller would be unlikely to have accepted AB InBev’s approach if they knew of a major problem.
“SAB played a decent game on defence.”
AB InBev’s now dominates the Latin America market while SABMiller has a strong presence in Africa, both of which are fast-growing markets that firms are looking to tap into.
What’s more, AB InBev is losing market share in its biggest market, the U.S., which accounts for 30% of revenues. InBev also owns Corona, Stella Artois and Beck’s.
The companies described the agreement, which must be approved by regulators, as a “possible deal”. With MillerCoors the asset most likely to have to go, no-one will be too upset.
Details of the savings have not been published yet and will probably have to wait until a deal is formally agreed upon. It could be an all-cash offer, or a mixture of cash and shares.
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Yet Alejandro Santo Domingo, the Harvard-educated fixture of New York high society, is according to media reports well-acquainted with AB InBev’s controlling shareholders, including Brazilian billionaire Jorge Paulo Lemann. If all shares were sold at this price, SABMiller would be valued at about £71 billion. “But if you make reasonable assumptions about those, I think it’s a pretty good price all around”, said Morningstar analyst Phil Gorham.
