AB InBev Sweetens SABMiller Bid To $104 Billion Wednesday

SABMiller’s board, excluding representatives of Altria, said in a statement Wednesday that the proposal “substantially undervalues” the brewer.

Earlier, ABI had said it was disappointed at SABMiller’s rejection of its first two bids “without any meaningful engagement”.

“SABMiller is the crown jewel of the global brewing industry, uniquely positioned to continue to generate decades of standalone future volume and value growth for all SABMiller shareholders from highly attractive markets”, says SABMiller Chairman Jan du Plessis. Shares of AB InBev were up about 4%.

SABMiller rejects an informal takeover offer from Anheuser-Busch InBev of about $100 billion as being too low-Bloomberg.

“Altria urges SABMiller’s board to engage promptly and constructively with AB InBev to agree on the terms of a recommended offer”.

Shares in SABMiller have rocketed since AB InBev’s takeover hopes were revealed on September 16.

Belgium-based AB InBev – the world’s biggest beer firm – includes Budweiser and Stella Artois in its stable of beers.

AB InBev said it had proposed a cash price of GBP42.15 a share, with a so-called partial-share alternative aimed at pleasing SABMiller’s largest shareholders. Most SABMiller shareholders will accept the cash offer, since the cash-and-stock mix has a lower value of £37.49 a share, AB InBev said.

Shares in AB InBev were dipping by 1% Thursday, while shares in SABMiller were holding steady around £36.20 – well below the bid level.

The appointments come a day after Phoenix-based Freeport said it was cutting its board to nine from 16 as it prepares to separate the oil and gas unit after “constructive discussions” with shareholders.

A combined new group would be worth around 220 billion euros ($250 billion), and analysts think a fresh fourth offer is likely.

Read also: $250bn brewing behemoth: AB InBev targets SABMiller, shares rocket 23%.

SABMiller added that AB InBev had timed the approach to take advantage of SABMiller’s recently depressed share price, that the structure of the proposals discriminates against a few SABMiller shareholders, and that AB InBev hasn’t offered it comfort on the significant regulatory hurdles in the USA and China.

“For now, it?s uncertain if this will be acceptable and investors, judging by the muted response in the (SABMiller) share price this morning are cautious and probably more than a little dubious that this deal will go ahead” said Brenda Kelly, head analyst at traders London Capital Group.

Africans drink nine liters of beer per head, compared with a global average of 45, SABMiller said earlier this year.

As AB InBev has not yet made a formal offer, the proposed offer had no firm financing details.

We “believe that a combination of our two great companies would build the first truly global beer company”, Brito said.

However, it is understood that the SABMiller board is looking for an offer of £45-plus.