The Belgian brewer is now offering £67 billion, or $103 billion, up from its previous proposal of roughly £65 billion.
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While most shareholders appear disappointed at the GBP43.50 offer – and, judging by today’s share price movement, there are quite a few of them – they may be right in thinking that there is more money to be wrung from ABInBev. SABMiller, which has not entered into official talks with A-B InBev has to either agree to the deal or will have to seek extension by 5 pm on October 14 or else the transaction risks falling apart.
AB InBev has until 1600 GMT on Wednesday to launch a formal bid for SABMiller, which would rank as the biggest ever United Kingdom company takeover. A-B InBev Chief Executive Officer Carlos Brito countered by saying the board’s opposition lacks credibility and shareholders are being offered a price the brewer alone won’t achieve anytime soon.
“AB InBev’s determination to do this deal may ultimately be a problem for them”, said John Calley, a professor at Warwick Business School in the United Kingdom, via email.
As Bevco continues to remain silent on what it will do with its shares, SABMiller has rallied support from two big institutional investors – Aberdeen Asset Management and Kulczyk Investments, both of whom came out against AB InBev’s previous bid last Friday.
Target SABMiller has called the approach “opportunistic”, timed to take advantage of a double-digit decline in its share price in July and August, depressed by weaker emerging market currencies.
Three of the top 10 shareholders of SAB have already spoken in support of its board rejecting the AB InBev previous offer, which was £42.15 a share in cash for the majority of shareholders calling it undervalued.
Under the latest offer, 41% of SABMiller shareholders can elect an alternative involving a mix of restricted stock and cash that would value shares at 38.88 British pounds. AB InBev rose 0.3 percent to 98.64 euros.
The company added that it expects most SABMiller shareholders, other than Altria Group, Inc. and BevCo Ltd., would wish to elect for the cash offer.
Yet Alejandro Santo Domingo, a 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.
On the London Stock Exchange, SAB.L is trading at 3,699.50 pence, up 31.00 pence or 0.85 percent on a volume of 3.87 million shares.
If the deal eventually goes through, the combined company’s market share would cover about a third of global sales.
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SABMiller has also been hit by the weakness of local currencies, notably the South African rand and the Colombian peso, but the markets themselves have largely been growing.
