SABMiller shareholders divided over £65bn takeover approach

The Budweiser to Stella brewer Inbev only has until 5pm next Wednesday to table a formal offer or walk away from SAB for at least six months under the City’s Takeover Panel’s rules.

Bottles of Miller Lite and Bud Light beer that are products of SABMiller and Anheuser-Busch InBev (respectively) are shown on September 15, 2014 in Chicago. (Photo Illustration by Scott Olson/Getty Images)

SABMiller’s two largest shareholders are at odds over whether to back an improved £65bn takeover approach unveiled by the world’s largest brewer Anheuser-Busch InBev.

The FTSE 100 brewer behind Peroni and Grolsch quickly rejected InBev’s new proposal, saying it “still very substantially undervalues SABMiller”.

And while Altria, SAB’s biggest shareholder, indicated its backing for InBev’s approach, the second-largest investor, Colombia’s Santo Domingo family, backed SAB’s rejection. With their 15 per cent stake analysts said the Santo Domingos could torpedo a deal.

Shares in SAB closed up 11p at 3,633p, significantly short of the 4,215p-a-share cash approach, suggesting the City thinks a higher bid will be required.

The Budweiser to Stella brewer Inbev only has until 5pm next Wednesday to table a formal offer or walk away from SAB for at least six months under the City’s Takeover Panel’s rules.

InBev said it was disappointed that SAB had so far spurned its approaches without “meaningful engagement”. Its approach is currently conditional on a recommendation from SAB’s board and InBev’s chief executive Carlos Brito called on shareholders to “pressure the board and call the chairman”. He, however, refused to rule out tabling a hostile offer.

InBev’s offer is also pegged on Altria and the Santo Domingos accepting a cash and stock alternative offer, worth £37.94 a share. The new paper would not be listed and could not be sold for five years, though it could reduce their tax liabilities on the deal.

Altria, the US tobacco group whose 27 per cent in the UK group dates from its 2002 sale of Miller Brewing to SAB, urged the SAB’s board “to engage promptly and constructively with AB InBev to agree on the terms of a recommended offer” and threw its weight behind InBev’s latest proposal.

However, there was no public statement from the Santo Domingos, and shortly after it detailed its approach, InBev was forced by the Takeover Panel to clarify that it “does not currently have the support” of the family for its offer.

It emerged that the latest bid follows two earlier approaches worth £38 and £40 per share, which SAB’s board also rejected.

If the companies did tie up, it would combine AB InBev’s dominance in Latin America with SABMiller’s Africa presence, where it is the market leader in 15 countries. It would also strengthen both their grips on the lucrative South American market. Combined, the businesses would have some 224,000 employees and brew one in three pints poured across the globe.

Analysts at Nomura said: “While this [£42.15] represents an attractive offer, we would see potential for a further, final, sweetened offer around the mid £40s per share.”

Meanwhile Olly Wehring, managing editor of industry news website Just-Drinks, said: “This is the biggest transaction in the history of the brewing industry and I think the deal is now a case of when and not if.

“There is an element of the clock ticking, but it is unlikely that AB InBev will go hostile. SABMiller clearly has a figure in mind and it is going to take AB InBev digging out its wallet and taking on a bit more debt to win SABMiller’s hand.”