Cheers! AB InBev wins SABMiller on fifth try

BRUSSELS — SABMiller has accepted a takeover proposal at the fifth time of asking after Anheuser-Busch InBev (AB InBev) — the world’s largest brewer — set out a cash-and-share package worth almost £69 billion (S$147 billion).

The deal to create a brewer making almost a third of the world’s beer would rank in the top five mergers in corporate history and be the largest takeover of a UK company.

After repeated rebuttals from its next largest rival, AB InBev said yesterday it was willing to pay £44 in cash per SABMiller share, with a partial share alternative set at a discount and limited to 41 per cent of SABMiller shares.

AB InBev would add certain Latin American and Asian breweries to its already large presence and, crucially, see it enter Africa for the first time.

The new offer surpasses a Monday proposal set at £43.50 in cash and is 50 per cent above SABMiller’s shares on Sept 14, the day before speculation surfaced about an impending AB InBev approach.

SABMiller said it has indicated to AB InBev that its board would be prepared to accept the offer and said it had asked for a two-week extension to the deadline set for its rival to announce a firm intention to bid. The new deadline is Oct 28.

The new group would combine AB InBev’s Budweiser, Stella Artois and Corona lagers with SABMiller’s Peroni, Grolsch and Pilsner Urquell.

“We think that this is good value for SAB,” said Ms Alicia Forry, an analyst at Canaccord Genuity. “It’s great that they’ve come to a point where the valuation is agreed, and we expect ABI in due course to make a firm offer.”

After years of speculation, the deal has been hastened by the impact of slowing economies in the emerging China and Brazil markets. A 20 per cent drop in SABMiller shares in the months preceding AB InBev’s approach, and the prospect of an end to cheap credit, were also catalysts.

The agreement, which is tentative, caps more than two weeks of back-and-forth negotiations on price. Under UK takeover rules, AB InBev has until 5pm today to make a formal offer, but the companies have agreed to seek a two-week extension, to 5pm London time on Oct 28, to have time to formalise the agreement.

The parties have agreed that AB InBev would pay a break fee of US$3 billion (S$4.2 billion) to SABMiller in the event the transaction fails due to the significant regulatory issues or because AB InBev shareholders do not back it.

SABMiller’s two largest shareholders, Altria Group and Bevco, can receive cash and stock valued at £39.03 a share for their stakes, which account for 41 per cent of the company. They will not be able to sell the shares for five years, and will have the right to nominate directors. Agencies