AB InBev Increases Offer to SABMiller

On Tuesday, Anheuser-Busch InBev increased its offer to acquire SABMiller in their proposed megamerger of breweries of $100 billion in an attempt to quell revolt by investors over the deal’s valuation following the steep descent of the British pound

The beer behemoth based in Belgium raised its offer of cash to £45 or $59.10 per share from its previous offer of £44 to appease many of the shareholders of SABMiller based in London, who have been watching the value of the offer drop with sterling.

The pound contracted following the vote on June 23 by Britain to exit the European Union.

The fall had given a deflated value of the cash only offer by AB InBev intended for the majority of shareholders, compared with another cash as well as shares offer and aimed at the two largest shareholders of SABMiller – Altria Group the maker of cigarette based in the U.S. and the Santo Domingo family from Colombia.

That alternative that contains shares has soared in its value because shares of AB InBev are in euros.

AB InBev raised its cash component for its alternative offer per share by 88 cents. After the sweetened terms were announced Tuesday, and the increase in the euro versus the pound, the offer of partial shares, is almost £10 higher per share than in November.

The deal of partial share is open technically to any shareholder, but it comes with a lockup period of five years that is not attractive to many of the possible investors.

The offer comes following months spent by both companies pursuing approval from regulators for the huge merger. They agreed to sell large chunks of the business during the regulatory process raising stakes for both to reach a deal.

AB InBev, the largest brewer in the world, said that the sweetened offer is its final one, a phrase used under takeover rules in the UK that prevents it from another offer for the next six months.

SABMiller in its prepared statement said it hired a financial advisor following the currency volatility that has taken place of late and that the board of directors would consult with shareholders as well as meet to review formally the latest offer.

It added that the chairmen from both of the brewers met to talk on Friday, but they did not discuss any terms of the current deal.

The latest offer increases the value of the new deal at close to £79 billion equal to $103.82 billion.

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David Glass

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