A major City investor in SABMiller has spurned a sweetened £79bn takeover offer for the FTSE 100 brewer by rival Anheuser-Busch InBev, throwing the biggest deal in British corporate history into doubt.
Aberdeen Asset Management said the sale of SAB to Stella Artois-owner AB InBev “remains unacceptable”, despite the bidder this morning lifting its all-cash offer for the company by £1 to £45 per share.
Belgian-Brazilian giant AB InBev was forced to improve its offer to stave off a growing revolt about the takeover by SAB investors, who believe the terms of the complex deal favour SAB’s two biggest shareholders at the expense of the rest. The Stella Artois-owner has declared its revised offer “final”, which under Takeover Panel rules means the offer cannot be lifted again and so ratchets-up the pressure.
But Aberdeen, a top 10 shareholder in SAB, argued today that the new offer made by AB InBev did not resolve the issues it has with the deal.
“The revised deal remains unacceptable as it both undervalues the company and continues to favour SABMiller’s two major shareholders,” the fund management giant said. “In the absence of an improved offer we would be more than happy to remain committed long-term shareholders in SABMiller.”
Aberdeen wants tobacco firm Altria and Colombia’s Santo Domingo family, which together own about 40pc of SAB, to be excluded from voting on the all-cash offer AB InBev has made. This would make it easier for minority SAB investors to reject the takeover if they wished.
The Santo Domingo stake is held in a vehicle called BevCo.
“Altria and BevCo should not be able to vote on the cash offer as they are inherently conflicted by their future stakes in AB InBev if the deal completes,” Aberdeen argued.
“We believe the board’s only choice is to treat Altria and BevCo as a separate class of shareholders and would urge them to make a public statement to this effect.”
At the centre of the investor revolt is the complex nature of the two-part deal proposed by AB InBev, which has been designed specifically to soften the tax hit Altria and BevCo would suffer from an all-cash offer.
The first part of the offer is an all-cash deal, which was originally pitched at £44 per SAB share but has now been lifted to £45.
The second is an offer of unlisted AB InBev stock that must be held for five years, and a small amount of cash, known as the partial share alternative (PSA). The cash element of the PSA has also been lifted under today’s improved AB InBev offer.
Altria and BevCo have already pledged to take the PSA, which will cut their tax bill and hands them stakes in AB InBev once the takeover completes. The PSA is open to all SAB shareholders, but in practice is unattractive to most because the shares are unlisted and cannot be sold for five years.
The rest of SAB’s shareholders are instead expected to take the all-cash offer, which was originally worth more than the PSA when the deal was first proposed last October.
However, sterling’s plunge following the Brexit vote has sent the value of the PSA surging above the all-cash offer.
Even under today’s revised terms, the PSA is still worth £51.14 a share, almost 14pc higher than the all-cash offer most SAB investors will have to take.
The latest twist in the blockbuster takeover comes after Aberdeen and other investors put SAB under mounting pressure to secure better terms from AB InBev in the wake of the pound’s drop.
A number of activist hedge funds, including Elliott Capital Advisors and The Children’s Investment Fund, have also taken stakes in SAB and pushed it to seek a higher cash offer from the Stella Artois owner.
Matters came to ahead last Friday when SAB’s chairman Jan du Plessis called Olivier Goudet, his counterpart at AB InBev, to discuss “AB InBev’s offer for SABMiller in light of recent exchange rate volatility and market movements”, the FTSE 100 brewer said today.
That call took place a day after SAB’s annual general meeting, when shareholders aired their frustration about the deal terms. Before Mr du Plessis spoke to Mr Goudet, SAB had already hired boutique investment bank Centerview, a major player in the ultra-competitive world of mergers and acquisitions, to help it re-examine the deal.
It is understood that AB InBev surprised SAB by informing the FTSE 100 brewer that it would lift its offer on Sunday evening.
“The board of SABMiller confirms that last week it engaged Centerview Partners to provide additional financial advice alongside that of its existing financial advisers,” the company said.
“The board will continue to consult with shareholders and will meet in due course formally to review, having regard to all facts and circumstances, the revised offer and a further announcement will be made thereafter.”
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