SABMiller’s board is now consulting with its largest shareholders to assess whether they like the new offer and plans to meet to consider the revised bid before making a final recommendation on whether shareholders should accept the latest deal.
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The move comes after ab InBev raised its cash bid for the British brewer to account for the pound’s plunge.
Still, AB InBev’s U.S.-listed shares fell 3 percent and shares of Molson Coors TAP.N , which is set to take over SAB’s USA operations, fell 5 percent on concerns about the fate of the $100 billion-plus deal, one of the biggest in corporate history.
Anheuser-Busch has received regulatory approval in the European Union, South Africa, and the United States for the transaction and is awaiting approval in China. That reduced the value of the cash offer compared with a cash-and-stock option tailored for USA tobacco company Altria and BevCo, an investment vehicle of the Santo Domingo family, which together own about 40 percent of SABMiller and wanted to remain shareholders of the new company.
SABMiller, maker of Pilsner Urquell, said it would now consult with shareholders and that “a further announcement will be made thereafter”.
Brill said bondholders may start to demand better protections after a number of M&A deals have been thrown into doubt after the companies involved had raised debt.
Hedge funds including Elliott Management Corp. and TCI Fund Management Ltd. have built stakes in SABMiller in recent days and have been agitating for a higher offer, according to a person familiar with the matter.
SABMiller announced that there would be a board meeting on Tuesday this week to discuss the new terms, while AB Inbev have intimated that this will be their final offer. SABMiller closed lower in London trading before the Bloomberg report broke.
AB InBev doesn’t want the opportunity to slip through its hands and is still very interested in completing the agreement.
Bernstein Research estimates that the increased offer represents an 8% premium to the “fair value” of SABMiller. This could, again, act against AB InBev.
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Last year AB InBev and SABMiller agreed to the blockbuster tie-up that will create the world’s biggest drinks firm. In the last two years, Anheuser has acquired Golden Road, Four Peaks, Oregon’s 10 Barrel Brewing, and the Seattle-based Elysian Brewing Company, the fastest-growing brewer in Washington, to add to its craft beer portfolio already comprising the likes of Blue Point and Goose Island brands. The deal is critical to AB InBev’s growth.
