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13-10-2015, 07:44 AM
AB InBev raises bid for SABMiller to $US103 billion
[Image: 915519-48867244-7122-11e5-87c5-82c509632f8f.jpg]
Australia’s Victoria Bitter — one of SABMiller’s popular international brands. Source: News Limited
[b]Anheuser-Busch InBev has sweetened its takeover proposal for SABMiller as it sought to get back on track after going public last week with an offer that was designed to get SABMiller’s biggest shareholders on board with the deal, but instead backfired.[/b]
AB InBev’s latest proposal — its fourth in a few weeks — values the world’s No. 2 brewer at $US103.3 billion ($A140.2bn) — a 48 per cent premium to the company’s closing price on September 14, the day before media speculation about a deal began to circulate. Its previous proposal, unveiled last Wednesday, valued the maker of best selling beers include Australia’s Victoria Bitter and Carlton Draught at $US99.2 billion.
AB InBev, the world’s biggest brewer, miscalculated when it went public with its proposal last week, according to people familiar with its efforts. It thought it had the backing not only of SABMiller’s biggest shareholder — Marlboro cigarette maker Altria Group Inc., which owns a 27 per cent stake — but also of the two board members representing the Santo Domingo family, which controls 14 per cent of SABMiller. Instead, the Santo Domingo family joined the majority of the board in voting against the offer.
The revised proposal offers SABMiller’s shareholders £43.50 a share in cash, up from £42.15 a share last Wednesday. The proposed bid also offers a partial-share alternative for 41 per cent of the stock, essentially a combination of cash and stock translating into a lower per-share price of £38.88 — up from £37.49 a share.
The partial-share alternative is designed to appeal to Altria and Colombia’s Santo Domingo family. The alternative offers both holders tax and accounting advantages, along with the opportunity to keep a stake in the combined company. AB InBev made the deal more lucrative by raising the cash offer to those shareholders by 50 per cent to £3.56 per share from last week’s offer of £2.37 per share.
AB InBev, the maker of Budweiser and Stella Artois and the world’s largest brewer, has said it won’t go ahead with a takeover without both holders backing the partial-share plan.
A person familiar with AB InBev’s approach said the company’s public proposal last week has made it all but impossible to negotiate with SABMiller.
The result has raised questions on both sides of the deal about whether it can get done, according to people involved in the talks. That doubt stems from the reticence of the Santo Domingo family. AB InBev representatives discussed their offer with the family before making it last week and were surprised they didn’t have the Santo Domingo’s support.
On Friday, two other large SABMiller shareholders — Aberdeen Asset Management and Poland’s Kulczyk Investments — said publicly that they too supported SABMiller’s board and encouraged AB InBev to increase its offer. Both shareholders declined to comment on AB InBev’s latest offer. The Santo Domingo family couldn’t be reached for comment.
Analysts were divided on whether the latest offer would have AB InBev’s desired effect. Under UK takeover rules, AB InBev has until October 14 to make a firm offer, as opposed to the current proposal, for SABMiller or walk away for at least six months. The deadline can be extended only if SABMiller requests it.
“We think the most likely scenario is that the increased proposal brings SAB’s board more meaningfully to the negotiating table, and SAB’s board asks for an extension” of the deadline, said Evercore ISI analyst Robert Ottenstein.
Others were less sure. The UK brewer has, so far, shown no signs of agreeing to AB InBev’s advances.
“They’re trying to get SABMiller to open the door and I don’t think this is going as they’d hoped,” said Caroline Levy, an analyst with CLSA. “They’re playing it down to the wire and hoping for an extension.”
A spokeswoman for SABMiller declined to comment on the latest proposal.
AB InBev’s push for SABMiller comes as the Belgian brewer finds itself operating in less desirable markets than its UK rival. In the US and Brazil, which account for about half of AB InBev’s total sales, combined beer volume fell 3.9 per cent over the first half of the year to about 80.5 million barrels from 83.7 million barrels.
Consumption in developed markets has slowed so much that the global beer market is expected to decline this year for the first time in 30 years, falling by 0.1 per cent, according to industry tracker Plato Logic. The bulk of global growth will come from Africa, which is expected to grow by 2.6 per cent.
SABMiller operates across Africa and has a commanding position on the fast-growing continent. It also has a better footprint than AB InBev in Latin America where SABMiller markets like Peru and Colombia helped the company deliver a 6 per cent increase in beverage volume from the region over the first half of the year.
SABMiller brings “solutions” to AB InBev while AB InBev only brings “problems” to SABMiller, said HSBC analyst Carlos Laboy.
He added that if he were SABMiller, he would say, “Why do I want to accept the burden and weight of the difficulties you bring?”
With Saabira Chaudhuri
Wall Street Journal
- TRIPP MICKLE
- THE WALL STREET JOURNAL
- OCTOBER 13, 2015 7:35AM
[Image: 915519-48867244-7122-11e5-87c5-82c509632f8f.jpg]
Australia’s Victoria Bitter — one of SABMiller’s popular international brands. Source: News Limited
[b]Anheuser-Busch InBev has sweetened its takeover proposal for SABMiller as it sought to get back on track after going public last week with an offer that was designed to get SABMiller’s biggest shareholders on board with the deal, but instead backfired.[/b]
AB InBev’s latest proposal — its fourth in a few weeks — values the world’s No. 2 brewer at $US103.3 billion ($A140.2bn) — a 48 per cent premium to the company’s closing price on September 14, the day before media speculation about a deal began to circulate. Its previous proposal, unveiled last Wednesday, valued the maker of best selling beers include Australia’s Victoria Bitter and Carlton Draught at $US99.2 billion.
AB InBev, the world’s biggest brewer, miscalculated when it went public with its proposal last week, according to people familiar with its efforts. It thought it had the backing not only of SABMiller’s biggest shareholder — Marlboro cigarette maker Altria Group Inc., which owns a 27 per cent stake — but also of the two board members representing the Santo Domingo family, which controls 14 per cent of SABMiller. Instead, the Santo Domingo family joined the majority of the board in voting against the offer.
The revised proposal offers SABMiller’s shareholders £43.50 a share in cash, up from £42.15 a share last Wednesday. The proposed bid also offers a partial-share alternative for 41 per cent of the stock, essentially a combination of cash and stock translating into a lower per-share price of £38.88 — up from £37.49 a share.
The partial-share alternative is designed to appeal to Altria and Colombia’s Santo Domingo family. The alternative offers both holders tax and accounting advantages, along with the opportunity to keep a stake in the combined company. AB InBev made the deal more lucrative by raising the cash offer to those shareholders by 50 per cent to £3.56 per share from last week’s offer of £2.37 per share.
AB InBev, the maker of Budweiser and Stella Artois and the world’s largest brewer, has said it won’t go ahead with a takeover without both holders backing the partial-share plan.
A person familiar with AB InBev’s approach said the company’s public proposal last week has made it all but impossible to negotiate with SABMiller.
The result has raised questions on both sides of the deal about whether it can get done, according to people involved in the talks. That doubt stems from the reticence of the Santo Domingo family. AB InBev representatives discussed their offer with the family before making it last week and were surprised they didn’t have the Santo Domingo’s support.
On Friday, two other large SABMiller shareholders — Aberdeen Asset Management and Poland’s Kulczyk Investments — said publicly that they too supported SABMiller’s board and encouraged AB InBev to increase its offer. Both shareholders declined to comment on AB InBev’s latest offer. The Santo Domingo family couldn’t be reached for comment.
Analysts were divided on whether the latest offer would have AB InBev’s desired effect. Under UK takeover rules, AB InBev has until October 14 to make a firm offer, as opposed to the current proposal, for SABMiller or walk away for at least six months. The deadline can be extended only if SABMiller requests it.
“We think the most likely scenario is that the increased proposal brings SAB’s board more meaningfully to the negotiating table, and SAB’s board asks for an extension” of the deadline, said Evercore ISI analyst Robert Ottenstein.
Others were less sure. The UK brewer has, so far, shown no signs of agreeing to AB InBev’s advances.
“They’re trying to get SABMiller to open the door and I don’t think this is going as they’d hoped,” said Caroline Levy, an analyst with CLSA. “They’re playing it down to the wire and hoping for an extension.”
A spokeswoman for SABMiller declined to comment on the latest proposal.
AB InBev’s push for SABMiller comes as the Belgian brewer finds itself operating in less desirable markets than its UK rival. In the US and Brazil, which account for about half of AB InBev’s total sales, combined beer volume fell 3.9 per cent over the first half of the year to about 80.5 million barrels from 83.7 million barrels.
Consumption in developed markets has slowed so much that the global beer market is expected to decline this year for the first time in 30 years, falling by 0.1 per cent, according to industry tracker Plato Logic. The bulk of global growth will come from Africa, which is expected to grow by 2.6 per cent.
SABMiller operates across Africa and has a commanding position on the fast-growing continent. It also has a better footprint than AB InBev in Latin America where SABMiller markets like Peru and Colombia helped the company deliver a 6 per cent increase in beverage volume from the region over the first half of the year.
SABMiller brings “solutions” to AB InBev while AB InBev only brings “problems” to SABMiller, said HSBC analyst Carlos Laboy.
He added that if he were SABMiller, he would say, “Why do I want to accept the burden and weight of the difficulties you bring?”
With Saabira Chaudhuri
Wall Street Journal
