AB InBev Makes Revised Proposal to Buy SABMiller

LONDON—Anheuser-Busch InBev NV on Wednesday said it has made a proposal to SABMiller PLC's board to buy the world's second-largest brewer in a deal valuing it at £ 68.24 billion ($104.1 billion).

The proposal of £ 42.15 a share in cash represents a premium of approximately 44% to SABMiller's closing share price on Sept. 14, the day before speculation about an approach from AB InBev arose.

AB InBev said there is a share alternative for Altria Group Inc. and BevCo Ltd. which hold roughly 41% of the SABMiller shares, allowing ABInBev to get appropriate financing and support the cash offer at a higher price than the brewer would otherwise be able to offer.

AB InBev said it has made two prior written proposals in private to SABMiller, the first for £ 38 a share in cash and the second for £ 40 in cash.

"AB InBev is disappointed that the board of SABMiller has rejected both of these prior approaches without any meaningful engagement," said the brewer in a statement. "AB InBev believes that the revised cash proposal of GBP42.15 per share is at a level that the board of SABMiller should recommend."

SABMiller didn't immediately respond to requests for comment.

Altria said it supports a deal of £ 42.15 a share or higher, with a partial share alternative, saying this "would create significant value for all SABMiller shareholders." The tobacco giant, which is SABMiller's largest shareholder, said it would choose the partial shareholder would be prepared to elect the partial share alternative.

"Altria urges SABMiller's board to engage promptly and constructively with AB InBev to agree on the terms of a recommended offer."

AB InBev, under U.K. takeover rules, has until 5 p.m. on Oct. 14 to announce a "firm intention" to make an offer for SABMiller and specify the details of the offer. Wednesday's proposal doesn't count as being one.

If its overtures are firmly rejected or it decides to formally withdraw, AB InBev then would have to wait six months to approach SABMiller again, either through SABMiller's board or by approaching shareholders directly. Negotiations could resume sooner if SABMiller were to reverse itself and decide it was open to talks.

A tie-up between the two beer companies would bring household brands such as Budweiser, Corona and Stella Artois together with Pilsner Uruquell, Grolsch and Peroni, and give the combined company a major presence in the U.S., China, Europe, Africa and Latin America. Together, AB InBev and SABMiller sell over 30% of the world's beer volumes.

Such a deal has been rumored for years, and has been described by some analysts as the last major piece of consolidation that remains in the beer industry. Research firm Euromonitor has estimated that the combined company's market share would be 29% after the deal after likely divestments, giving it a 20 percentage point lead over the next biggest brewer, Heineken NV.

Write to Saabira Chaudhuri at [e-mail]

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October 07, 2015 02:55 ET (06:55 GMT)

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