SABMiller’s Board Recommends AB InBev’s Improved Offer as China Green-Lights Deal

01 Aug 2016 --- The executive board of SABMiller is to recommend that its shareholders accept Anheuser-Busch
InBev's improved offer as the so-called “megabrew” deal draws closer.

Budweiser owner AB InBev raised its offer for SABMiller last week after a fall in the value of sterling meant the original terms of the offer were less attractive.

Sterling has fallen in value by over 10 percent since the EU referendum.

The deal has also been green-lighted by Chinese regulators, a potential big hurdle before the deal could be finalised.

Regulators in China said that AB InBev must sell its stake in China's Snow Breweries to the state supported China Resources Beer for $1.6bn.

AB InBev raised its offer by around $58 a share to around $60 a share after investors expressed concern about the changing value of sterling amid its fall post-Brexit.

SABMiller chairman Jan du Plessis said: "The board's decision was difficult given changes in circumstances since the board originally recommended £44 per share in cash last November.

"Since then, various factors have affected the value of the offer, most importantly the impact of the Brexit vote on the value of sterling and the re-rating of comparable companies.

"This has made the board's decision more challenging, and we believe the final cash consideration of £45 per share to be at the lower end of the range of values considered recommendable."

However, there has been some disquiet among SABMiller investors over the way the deal favors its two largest shareholders, tobacco company Altria and BevCo, the Columbian family fund.

The board of SABMiller said it would ask the courts to enable a separate vote by public investors.

Du Plessis added: “We are cognisant that the offer taken up by Altria and BevCo stood at a discount to the cash consideration, but recent events have resulted in it now standing at headline premium, before any illiquidity discount.”

“Amongst other reasons, that is why we intend to ask the UK court to treat Altria and BevCo as a separate class of shareholders.”

“Altria and BevCo are both represented on the SAB board, which unanimously recommended the offer and the plan for separate vote for the two types of shareholder. Three quarters of the public investors will need to vote in favor for the deal to go through.”

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