|28 September 2016
Shareholders back AB InBev and SABMiller £79bn ‘Megabrew̵7; deal
Scheherazade Daneshkhu, Consumer Industries Editor
SABMiller shareholders voted overwhelmingly in favour of the £79bn offer from Anheuser-Busch InBev, paving the way for the Belgian brewer to clinch the third-largest merger in corporate history after a year-long pursuit.
Wednesday’s vote, held at a hotel in London’s Park Lane near SAB’s Mayfair headquarters, resulted in 95.5 per cent of SAB shareholders accepting the larger brewer’s £45-a-share cash offer and approving the UK’s biggest corporate deal.
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Megabrew, as the merger has been dubbed, combines the world’s two largest brewers in an industry that has heavily consolidated over the past decade and faces challenges from the growth of craft beer.
The takeover will result in AB InBev, whose brands include Budweiser, Stella Artois, Beck’s and Corona, selling one in four beers around the world and reaping 45 per cent of the industry’s profits.
It will also mark the end of the former South African Breweries’ 120-year history as an independent company, instead giving AB InBev coveted access to fast-growing beer markets in Africa, where it barely has a presence and in those parts of Latin America where it was not already dominant.
In Brussels, where AB InBev shareholders also endorsed the deal, the brewer announced that the enlarged group’s name would remain AB InBev, with no incorporation of the SABMiller moniker.
That provoked some disappointment at the already subdued London gathering. But Jan du Plessis, SAB chairman who helped bid up AB InBev’s price, said: “AB InBev are paying a full price for the company; they can do with the company what they wish, they can call it what they wish; that’s the way life works and that’s fine. That’s the way it is.”
The acquisition is the most ambitious in a series of audacious takeovers spearheaded by Jorge Paulo Lemann, the Brazilian billionaire who is AB InBev’s single largest individual shareholder.
SAB’s two largest investors — Altria, the US tobacco company and BevCo, the family investment vehicle of Colombia’s Santo Domingo family — were excluded from the vote, following a UK High Court ruling last month to treat them as a separate class of shareholder.
Instead, Altria and BevCo, which own a combined 41 per cent of SAB, formalised in a separate vote their acceptance of AB InBev’s partial share alternative of 0.483969 in AB InBev shares and £4.66 in cash for each SAB share.
The UK court decision followed growing investor criticism about the influence of the two biggest shareholders and the deal’s structure of two offers. The partial share offer, aimed at the two largest shareholders, ended up being more favourable than the cash offer because of the drop in the value of the pound after the UK’s Brexit vote.
That pressure led to AB InBev raising its cash offer in July.
Aberdeen Asset Management, which holds 1 per cent of SAB and voted against the takeover, said it was disappointed at the outcome but hoped its lobbying “helped to secure a better deal for our clients, albeit the final price still significantly undervalued SABMiller in our view”.
Although the cash-and-share offer was open to all shareholders, the five-year lock-up period made it unattractive to almost all but the two largest investors for whom the structure is tax-friendly.
Anna Ward, analyst at Euromonitor International, said that despite AB InBev’s global spread after the deal, it would still have to grapple with changing consumer tastes and the rise of craft beer in mature markets.
“Considering the ever-growing consumer preference for small-scale local beers, creating such an industry behemoth seems arguably counter-intuitive,8221; she said. “Nevertheless, in light of the slowdown in key markets such as Brazil, extending the reach of its flagship global brands will undoubtedly remain a priority for AB InBev.”
AB InBev has lined up $16.5bn in disposals of SAB assets, including Peroni and Grolsch in Europe, Miller Lite in the US and Snow in China to secure approval from antitrust regulators in more than 20 countries. The biggest remaining SAB brands are Castle Lager, Victoria Bitter and Aguila, reflecting the brewer’s more diversified and decentralised culture compared with that of AB InBev.
c Separately on Wednesday, the US Securities and Exchange Commission said AB InBev had agreed to pay $6m to settle charges it made improper payments to officials in India, in violation of the Foreign Corrupt Practices Act, and blocked a whistleblower from supporting its investigation.|
|happy to stick here
not giving my brokers any extra commision :)|
|time value of money
deal should complete in a few months|
|Stick, twist or fold?With the divi secured, what to do now? £45 on the table, currently £43.6 approx 3.2% upside from here, until the deal complete. Assume this 3.2% is the current priced in risk.|
|Ex dividend today
|Hopefully the wobble is over and the takeover back on track. Next up is the divi :-)|
|I agree spob, they are greedy but they should know better, as experienced fund managers they would know that sometimes things go for you and sometimes against you.|
|No one knows by how much the share price will fall if it fails; possibly to it's pre bid price (around £30 from memory) and upside from there is unknown as is the time span to get back to these levels. There are risks as with everything stock market related but also rewards if things go the right way!|
|Will the share price collapse if the takeover fails?Is todays share price fall a good opportunity to buy in assuming the takeover will go ahead?|
|I sold out yesterday at 4483
Bought back this morn 4330|
|I just added to my holding, around 5% upside including dive in short term. Can't get them returns in the bank ?|
|offer now 45 pounds plus approx 71p divi to go ex on 4 Aug
current price £43.30|
|Basically the above means the August dividend is permitted and thus is in addition to the 44 pound cash offer|
|Full year dividend per share of 122.0 US cents, up 8% on prior year, with final dividend of 93.75 US cents per share payable on 12 August 2016(6) . AB InBev and SABMiller do not anticipate completion of the recommended acquisition prior to this date.
The full year dividend and the final dividend are permitted dividends within the terms of SABMiller and AB InBev's joint Rule 2.7 announcement on 11 November 2015.
Under the terms of the Transaction
AB InBev has agreed that SABMiller Shareholders will be entitled to receive any dividends announced, declared or paid by SABMiller, in each case in the ordinary course (including on usual biannual declaration, record and payment dates) in respect of any completed six-month period ending 30 September or 31 March prior to Completion of the Transaction, subject to and on the terms set out in paragraph 17 of this Announcement. Such dividends shall not exceed:
(i) US$0.2825 per SABMiller Share for the six month period ended 30 September 2015 and a further US$0.9375 per SABMiller Share for the six month period ending 31 March 2016 (totalling US$1.22 per SABMiller Share); and
(ii) in respect of any subsequent six month period ending 30 September or 31 March, an amount representing the same ratio of the amount of the dividend per SABMiller Share to adjusted earnings per SABMiller Share for the relevant six month period as compared to the ratio for the relevant six month period ended 30 September 2015 or 31 March 2016, respectively,
without any consequential reduction in the Consideration in respect of each SABMiller Share payable under the Transaction, on the terms set out in paragraph 17 of this Announcement. If any dividend or other distribution is announced, declared, made or paid in respect of the SABMiller Shares on or after the date of this Announcement and prior to Completion, other than a Permitted Dividend, or in excess of the Permitted Dividends, AB InBev reserves the right to reduce the Consideration in respect of each SABMiller Share by an amount equivalent to all or part of any such excess, in the case of the Permitted Dividends, or otherwise by the amount of all or part of any such dividend or other distribution. For the avoidance of doubt, if Completion occurs after the announcement or declaration of a Permitted Dividend but before its payment date, SABMiller Shareholders will not be entitled to receive such dividend|
Ex div 4 Aug 16
Paid 12 Aug 16
Amount c93 or ~ 72p|
|is the forthcoming dividend included in the cash offer of 44 quid
or is it 'in addition' to the 44 pound cash offer|
|Read AlphaValue's note on SABMILLER PLC (SAB), out this morning, by visiting hxxps://www.research-tree.com/company/GB0004835483
"SABMiller released its FY accounts. As a reminder, the group’s NPR grew +5% with price/mix, whereas volumes were up +2% (lager +1%, soft drinks +6%). For FY16, the group’s EBITA on an organic basis progressed by +8% (EBITA margin +60bp). On reported figures (excluding revenue from associates and JVs), FY revenue was down 10%, whereas the operating margin contracted 270bp. The share of profits from associates and JVs was up +4%. The FY net profit was down 18% on the back of adverse FX and impairment charges in Angola an ..."|
|Read Beaufort Securities's note on SABMILLER PLC (SAB), out this morning, by visiting hxxps://www.research-tree.com/company/GB0004835483
"AB InBev shuffled assets with Ambev even as the company awaits the green signal to the proposed merger of SABMiller and AB InBev from competition authorities. In November 2015, AB InBev announced plans to acquire SABMiller for a consideration of around £71bn. Now, AB InBev plans to swap its breweries in Colombia, Peru and Ecuador for SABMiller's Panamanian beer and soft drink businesses. This will enable AB InBev to focus on countries where the SABMiller businesses it acquires are well established. Recently, SABMiller posted strong growth in net producer revenues for the year ended 31st March 2016. Moreover, if the merger is approved, AB InBev and SABMiller would be together selling more than 30% of the world's beer, including brands such as Budweiser, Stella Artois, Grolsch and Pilsner Urquell. In the meantime, SABMiller's strategies for expanding the beer business line and diverse portfolio of brands seem judicious. Thus, in view of the overall optimism surrounding the company's business prospects..."|