AB InBev Makes Revised Proposal to Buy SABMiller -- 2nd Update

By Saabira Chaudhuri 

LONDON--Anheuser-Busch InBev NV turned the heat up on SABMiller PLC by going public with a proposal it has made to the world's second-largest brewer's board to buy it in a deal valuing it at up to GBP68.24 billion ($104.1 million).

AB InBev said it is proposing a price of GBP42.15 a share, with a partial share alternative available to SABMiller's largest shareholders, and revealed that the latest proposal is the third it has made to the company's board.

AB InBev said SABMiller had rejected two previous proposals. But in a separate release Wednesday, SABMiller's biggest shareholder said it was satisfied with the latest offer, adding pressure to the London-listed brewer's management.

The cash proposal represents a premium of approximately 44% to SABMiller's closing share price of GBP29.34 on Sept. 14, the day before speculation about an approach from AB InBev arose.

AB InBev said the share alternative is available for Altria Group Inc. and the Santo Domingo family, which holds roughly 41% of SABMiller's shares. The structure would allow AB InBev to get financing and support the cash offer at a higher price than the brewer would otherwise be able to offer, and give tax relief to Altria and the Santo Domingos, which has been a key issue during negotiations so far.

Under U.K. takeover rules, SABMiller 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 constitute a firm intention to make an offer, said AB InBev, cautioning that there is no certainty that an offer will be made.

AB InBev said it has made two prior written proposals in private to SABMiller, the first for GBP38 a share in cash and the second for GBP40 a share.

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

SABMiller didn't immediately respond to requests for comment.

Wednesday's statement marks a change in tone from AB InBev, which when talks were first disclosed said its "intention is to work with SABMiller's board toward a recommended transaction."

Representatives of AB InBev didn't respond to requests for comment.

Altria in its own statement said it supports a deal with AB InBev at GBP42.15 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 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."

A tie-up between the two beer companies would bring household brands such as Budweiser, Corona and Stella Artois together with Pilsner Urquell, 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.

SABMiller on Tuesday brought forward a trading statement originally slated for Oct. 15, a move that was intended to give its shareholders information ahead of a formal proposal being made by AB InBev.

Write to Saabira Chaudhuri at [e-mail]

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(END) Dow Jones Newswires

October 07, 2015 03:30 ET (07:30 GMT)

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