AB Inbev Makes its Third Move on SABMiller to Create 'Truly Global Beer Company'
07 Oct 2015 --- SABMiller is being urged to seriously consider a third offer by AB Inbev, the world’s largest brewer, as the the latter reportedly makes an offer that values SABMiller at $104.1bn. Having rejected two previous offers on the grounds that they seriously undervalue the company, SABMiller has acknowledged the offer and says it will consider it ‘as soon as practicable’.
Shares at SABMiller were down, though, amid reports that it has already dismissed two offers from AB Inbev. Majority shareholder Altria, which makes Marlboro cigarettes, has been outspoken in its support for a takeover by AB Inbev and has reportedly urged SABMiller to engage promptly and constructively in talks.
In a statement, AB Inbev said: “Anheuser-Busch InBev today announces a revised proposal to the Board of SABMiller plc to combine the two companies and build the first truly global beer company. The revised proposal that AB InBev has made today is to acquire SABMiller for GBP 42.15 per share in cash, with a partial share alternative available for approximately 41% of the SABMiller shares. AB InBev has made two prior written proposals in private to SABMiller, the first at GBP 38.00 per share in cash and the second at GBP 40.00 per share in cash. AB InBev is disappointed that the Board of SABMiller has rejected both of these prior approaches without any meaningful engagement.”
The company goes on to say that the revised proposal is designed to enable a compelling cash offer to be made to SABMiller’s public shareholders and to provide a continuing attractive investment for Altria Group, Inc. and BevCo Ltd. (who together hold approximately 41% of the SABMiller shares), which AB InBev believes will satisfy their financial requirements. Importantly, the partial share alternative enables appropriate financing to be achieved and supports the cash offer at a higher price than AB InBev would otherwise be able to offer.
AB InBev believes that the revised cash proposal of GBP 42.15 per share is at a level that the Board of SABMiller should recommend.
“We have the highest respect for SABMiller, its employees and its leadership, and believe that a combination of our two great companies would build the first truly global beer company,” said Carlos Brito, Chief Executive Officer of Anheuser-Busch InBev. “Both companies have deep roots in some of the most historic beer cultures around the world and share a strong passion for brewing as well as a deep seated tradition of quality. By bringing together our rich heritage, brands and people we would provide more opportunities for consumers to taste and enjoy the world’s best beers. We also both strive to have a positive impact on the communities in which we work and live as two of the world’s leading corporate citizens. Put simply, we believe we can achieve more together than each of us could separately, bringing more beers to more people and enhancing value for all of our stakeholders.”
SABMiller acknowledged the third offer in a statement on its website this morning: “SABMiller notes the announcement made by AB InBev.
“On 22 September 2015, AB InBev made a highly conditional proposal to acquire the entire issued share capital of SABMiller for GBP 62 billion...The board unanimously concluded that it very substantially undervalues SABMiller, its unique and unmatched footprint, and its standalone prospects. The full Board therefore unanimously rejected the GBP 40 Proposal.”
It goes on to report that next contact from AB InBev was a meeting on 5 October 2015 at which AB InBev tabled the same GBP 40 Proposal again. During the meeting, its CEO also indicated the possibility, subject to recommendation by the SABMiller Board and approval by the AB InBev Board, of increasing its offer for the entire issued share capital of SABMiller to GBP 65 billion, including an all-cash offer of GBP 42 per SABMiller share alongside a PUSCA (the “GBP 42 Proposal”). The full Board of SABMiller met on 5 October 2015 and unanimously reconfirmed its rejection of the GBP 40 Proposal.
The Board, excluding the directors nominated by Altria Group Inc., also concluded that, even if AB InBev formalised the GBP 42 Proposal, it would reject such a proposal as it still very substantially undervalues SABMiller.
“It should be noted that the all-cash offer within the new proposal announced today (the “GBP 42.15 Proposal”) is only GBP 0.15 higher than the GBP 42 Proposal considered and rejected on 5 October 2015,” the statement read. “The Board will, of course, meet formally to consider the GBP 42.15 Proposal as soon as practicable and a further announcement will be made thereafter.”
Jan du Plessis, Chairman of SABMiller, said: “SABMiller is the crown jewel of the global brewing industry, uniquely positioned to continue to generate decades of standalone future volume and value growth for all SABMiller shareholders from highly attractive markets. AB InBev needs SABMiller but has made opportunistic and highly conditional proposals, elements of which have been deliberately designed to be unattractive to many of our shareholders. AB InBev is very substantially undervaluing SABMiller.”
