SABMiller Pauses Integration Work With Anheuser-Busch InBev -- Update

By Saabira Chaudhuri 

LONDON -- SABMiller PLC has paused its integration work with Anheuser-Busch InBev NV, according to a person familiar with the matter, as the London-based brewer's board consults with shareholders over whether the revised offer AB InBev broached on Tuesday is acceptable.

The pause in integration didn't necessarily signal that the SABMiller board would oppose the new offer. Still, news of the halt worried investors, sending AB InBev shares down 2.3% in recent trading in Brussels. SABMiller shares were down 0.7% in London.

In the spring, SABMiller had begun working with AB InBev on integrating finance, technology, procurement and certain supply-chain functions, the person said, but the company on Tuesday decided to halt this work after AB InBev said its revised offer for SABMiller was final.

SABMiller's board is now consulting with shareholders and plans to meet to consider the revised offer before making a final recommendation. The board will consider a range of factors, including how the pound's weakness has eroded the all-cash portion of the deal's premium and what SABMiller's valuation would be if the AB InBev bid falls through, the person familiar with the matter said.

A decision by SABMiller's board could come within days, the person said.

Belgian-based AB InBev boosted its cash offer to GBP45 ($59.12) a share from GBP44 a share to appease SABMiller shareholders, who had watched the value of the offer fall along with sterling. The pound sank after the June 23 vote by Britain to leave the European Union.

That sterling decline has deflated the value of AB InBev's cash-only offer, intended for most shareholders, compared with a separate cash-and-shares offer aimed at SABMiller's two biggest stockholders: U.S. cigarette maker Altria Group Inc. and Colombia's Santo Domingo family.

Aberdeen Asset Management, a large SABMiller shareholder, on Tuesday characterized AB InBev's revised offer as "unacceptable," following the drop in the pound, saying the deal unfairly favors investors who can opt for the cash and stock offer.

But other SABMiller shareholders, such as New York-based investment-management firm Twin Capital Management LLC, said they want to the deal to go through. "I think people are being too shortsighted," said Twin Capital Chief Executive David Simon in an interview on Wednesday. Mr. Simon, who said his firm owns more than a million shares of SABMiller, characterized AB InBev's offer as "fair."

Another large SABMiller shareholder, South Africa's Public Investment Corp. -- Africa's largest pension-fund manager -- in an emailed statement said it is "still in discussions with SABMiller on the offer price." It declined to make its view public at this point.

Write to Saabira Chaudhuri at [e-mail]

(END) Dow Jones Newswires

July 27, 2016 13:15 ET (17:15 GMT)

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