SABMiller rejects AB InBev’s $104 billion takeover approach

SABMiller, the world’s second largest brewer, has promptly rejected an improved offer from AB InBev on Wednesday, saying the 68 billion-pound ($104 billion) offer “very substantially undervalues” it.

SABMiller Plc rejected Anheuser-Busch InBev NV’s 65.2-billion pound (S$141.85 billion) takeover proposal as too low, putting it in conflict with its biggest shareholder, which urged the brewer to support the overture.

“AB InBev is disappointed that the board of SABMiller has rejected both of these prior approaches without any meaningful engagement”, said Mr Brito.

“AB InBev needs SABMiller but has made opportunistic and highly conditional proposals, elements of which have been deliberately created to be unattractive to many of our shareholders.”Societe Generale (Swiss: 519928.SW – news) believes the offer will be increased to £43 per share based on the last few offers”.

ABI said it believed its latest proposal should be highly attractive to SABMiller shareholders and provided an extremely compelling opportunity.

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

SABMiller’s has a portfolio of more than 200 beers, including Peroni and Grolsch. After five years, the shares would be convertible into AB InBev’s ordinary stock on a one-for-one basis. Meanwhile there is a division of opinion among SABMiller’s shareholders, while the issue of regulatory hurdles in USA and China appear to be adding friction.

For a while now, Anheuser-Busch (AB) InBev, the world’s largest brewer has tried to woo its biggest rival South Africa’s SABMiller, into a merger.

At 1210 BST, SABMiller shares were down 0.3% at 3,623p and AB InBev shares were off 0.7% at €98.00.

“Altria Group, which owns 27% of SABMiller and has three representatives on the board, has publicly stated that it supports our proposal”, AB Inbev said.

“The board of SABMiller has refused to meaningfully engage with us”, AB InBev Chief Executive Officer Carlos Brito said in the statement.

The blockbuster deal, if accepted, would create a drinks giant worth more than £180bn.

Mainstream beer brands have been increasingly under pressure in developed markets from the rising popularity of craft brews, often made by small independent producers.

AB InBev is the world’s biggest beer business, while SABMiller is the global number two.

SABMiller shareholders rejected two previous offers at £38 and then £40, and analysts said they may well do the same again.

Jeremy Cunnington at Euromonitor worldwide added: “AB InBev’s bid for SABMiller is the inevitable conclusion of over a decade of consolidation within the brewing industry”.

A statement from ABInBev noted it was now willing pay 42.15 pounds in cash per SABMiller share.