Investors are concerned that the Brexit decision last month has made AB InBev’s $100 billion merger deal with SABMiller less attractive.
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In a news release, Anheuser-Busch InBev said that the offer was “final and that it will not further increase the cash consideration or the cash element or the exchange ratio of the partial share alternative”. Bernstein Research brewing analyst Trevor Stirling said SABMiller’s shares would probably drop to 41.50 pounds if AB InBev’s takeover bid failed. SABMiller holder Aberdeen Asset Management said even the revised proposal undervalues the company and is unacceptable because stockholders are receiving different treatment.
If the SAB board accepts, they risk alienating institutional investors such as Aberdeen Asset Management ahead of possible shareholder votes to approve or reject the deal.
In contrast, it believes the cash offer is not high enough – and is angry that Altria and Bevco, which have already given “irrevocable undertakings” to back the buyout, get to use their 40 per cent shareholding to support a deal that hands them a much larger windfall.
Hedge fund managers including Elliott Management, TCI and Davidson Kempner claimed the alternative offer comprising mainly of stock – which will consist of shares in AB InBev that will not trade publicly for five years – was aimed at winning the support of United States tobacco firm Altria and BevCo, the investment vehicle of the Santo Domingo brewing family. The new terms show the deep fall in the value of pound: The original offer was worth about $108 billion as per November’s exchange rates.
Anheuser-Busch InBev (NYSE:BUD) raised its bid for rival brewer SABMiller in an attempt to quash investor dissent. The company has taken on Centerview Partners as a new financial advisor.
The takeover is still awaiting regulatory approval in China. The deal is mostly about the growth opportunities in new markets for AB InBev, as SABMiller has a strong foothold in Africa, where AB InBev has little to no presence.
It added that the chairmen from both of the brewers met to talk on Friday, but they did not discuss any terms of the current deal. After the sweetened terms were announced Tuesday, and the increase in the euro versus the pound, the offer of partial shares, is nearly £10 higher per share than in November.
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