AB InBev raised its offer to appease SABMiller shareholders following a steep drop in the value of the British pound after Britain voted to leave the European Union. In November, when the original bid was officially launched, it was worth around 70 billion pounds, or $106 billion based on exchange rates at the time. SABMiller shares slipped 0.5% in London to 4,416.50 pence, paring gains after rising earlier in the morning and putting its market capitalization at around around £72.9 billion. The deal has already been approved by competition authorities in the USA and South Africa, leaving Chinese approval the last antitrust big hurdle to the combination. It didn’t state any rationale for the revised terms.
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The offer values SABMiller at about 79 billion pounds, or $104 billion. The funds have also claimed that the stock alternative will benefit Altria and BevCo – who own an estimated 40% stake n SABMiller – more than they will benefit others.
SABMiller said that it will ” continue to consult with shareholders” and will review the revised offer. That means AB InBev doesn’t benefit from the weakness of the British Pound, making the latest offer more expensive. Following Brexit, the valuation of the deal fell with the value of sterling.
However, Aberdeen Asset Management, with a 1.17 percent SABMiller stake according to Thomson Reuters data, said the revised offer was still unacceptable, although analysts said they thought the deal was now likely to go through.
The suspension, announced by SABMiller CEO Alan Clark in a memo to employees on Tuesday, came soon after AB InBev increased its cash offer to 45 pounds per share. “We have engaged with SABMiller’s board on the differential treatment of shareholders since the deal was first constructed”. The combined company will have the No. 1 or No. 2 positions in nearly all of the world’s biggest beer markets, and provide AB InBev its first toehold in Africa, where about 65 million people are due to reach the legal drinking age by 2023.
The headline figure was a cash amount of £44 per SABMiller share.
SAB directors now face a turbulent few days as they decide whether to recommend the final AB InBev offer.
Both companies spent months pursuing regulatory approval for the merger around the world.
The deal to merge SABMiller and AB InBev, called “Megabrew” by analysts, would create a behemoth controlling about half of the industry’s profits. AB InBev shares increased 0.6% to €115.50 ($126.83) in Brussels.
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In the light of Tuesday’s dramatic turn of events, the FTSE 100 brewer has suspended the integration planning work it had been undertaking with AB InBev.
