Anheuser-Busch InBev publicly slammed SABMiller PLC on Thursday for rejecting its latest proposal to buy the world’s second-largest brewer in a complicated cash-and-stock deal that the Belgian-based brewer insists is a good one for shareholders.
AB InBev made public its proposal to buy SABMiller for £42.15 ($64.57) in cash on Wednesday and offered what it called a partial share alternative for 41% of shares, which translates into a combination of stock and cash that has a combined lower value of £37.49. If SABMiller agrees to the proposal, AB InBev will end up paying £65.14 billion for SABMiller. The proposal has the support of SABMiller’s largest shareholder, Altria Group Inc.
In response, SABMiller said the offer “still very substantially undervalues SABMiller, its unique and unmatched footprint, and its stand-alone prospects.” Its board—excluding the directors nominated by Altria—rejected the proposal, which AB InBev said was the third it had made in recent days.
On Thursday, AB InBev Chief Executive Carlos Brito turned up the heat on SABMiller by directly addressing shareholders in a statement. “How long will it be before shareholders see a value of over £42 in the absence of an offer from AB InBev?” he wrote. “If shareholders agree that we should be in proper discussions, they should voice their views and should not allow the Board of SABMiller to frustrate this process and let this opportunity slip away.”
“We’ve noted their announcement, it contains nothing new,” said a SABMiller spokeswoman.
AB InBev said it is “surprised” that SAB’s board, excluding the three directors nominated by Altria, continues to say that the proposal undervalued SAB significantly, adding that the claim “lacks credibility.”
The world’s largest brewer noted that the cash part of the offer represents a 44% premium to SABMiller’s closing price on Sept. 14, the day before media speculation about a possible deal surfaced.
It added that it has the support of Altria, whose stake of more than 25% makes it SABMiller’s largest shareholder. AB InBev also responded to the SABMiller board’s Wednesday statement that the proposals were “highly conditional” and that AB InBev hadn’t yet provided it with comfort about the regulatory hurdles in China and the U.S.
“Together with its advisers, AB InBev has done significant work on regulatory matters and has identified solutions that provide a clear path to closing,” said the brewer in a statement.
The biggest regulatory hurdle for a deal between the world’s two largest brewers is likely to be the U.S., where AB InBev already has a roughly 45% market share and London-based SABMiller controls a further 25% through its MillerCoors LLC joint venture with Molson Coors Brewing Co.
Another potential regulatory headache is China, where AB InBev had a 14% market share last year, according to Euromonitor. Chinese authorities could require the brewer to exit SABMiller’s joint venture with China Resources Enterprise Ltd., which controls 23% of the market and produces the top-selling Snow brand.
“AB InBev intends to work proactively with regulators to resolve any concerns,” said the company in its statement.
By Saabira Chaudhuri
Source: Wall Street Journal
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