All convergence planning has been “paused” and there should be no contact with representatives of AB InBev, the maker of Budweiser, as SABMiller’s board considers the offer, Clark said in the memo. As of Monday, the option of a cash-only deal was 16% lower in value than the cash and stock alternative.
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Investors including Aberdeen, Elliott Management and Davidson Kempner Capital Management had raised concern with SABMiller about the deal in the wake of the pound’s plunge.
Altria and Bevco have undertaken to back the AB InBev offer, making it hard for the other highly fragmented shareholder base to co-ordinate the 25% holding needed to block the deal.
“They are very invested in making this work”, Forsyth said.
As of Monday, the value of the cash-and-stock offer had risen to 50.26 pounds a share, or 14.2 percent more than the original cash offer.
First, SABMiller investors based in the USA, who hold about 20 percent of the company’s floated shares, will get less of a payoff than they expected in dollar terms if the pound remains near its recent low against the US currency when the deal closes.
“The main thing from ABI’s perspective is they don’t want this to drag and if they engaged (activists) it would”, she said.
AB InBev said the increased offer was its final offer and that it “will not further increase the Cash Consideration or the cash element”. Following Tuesday’s announcement, the cash-and-stock offer is worth 51.14 pounds a share, still 13.6 percent more than the sweetened cash offer. Both features made the alternative unattractive to investors other than Altria and Bevco.
The Belgian-based brewer will now pay 45 pounds per share in cash for SABMiller, up from its earlier offer of 44 pounds per share in cash.
Anheuser-Busch InBev has been forced to give SABMiller a new merger deal. In November, it was worth 41.85 pounds, or 4.9 percent less than the cash offer.
But the pair did not discuss or agree ABI’s revised offer, which the latter said was final. The new terms value SABMiller at about £79 billion.
SABMiller said that its board would consult with shareholders before giving an answer.
SABMiller has asked Centerview Partners to provide additional financial advice alongside its existing advisers.
The new offer is an increase of £1 per share on the £44 originally proposed.
A merged group would add AB InBev’s dominance of Latin America to SABMiller’s strong presence in Africa, as well as their breweries in Asia.
It has had to make competition and public interest-related concessions in SA and the US.
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Hours later, some institutional shareholders indicated they were not happy with the sweetener and wanted more.
