AB InBev makes new 68b pound bid for rival SABMiller

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’s offer to pay 42.15 pounds, or about $63.97, a share in cash for SABMiller is a 16% premium to the closing price in London on Tuesday and a 44% premium to the closing price in mid-September, before merger talks began.

AB InBev has swallowed Seattle’s Elysian Brewing, Oregon’s 10 Barrel Brewing and Chicago-based Goose Island in the a year ago or two. A spokesman for SABMiller declined to comment on AB InBev’s statement.

“There is an element of the clock ticking, but it is unlikely that AB InBev will go hostile”.

Anheuser-Busch InBev approaches SABMiller with proposal that would create merged group with a market value of around $275 billion and would bring together AB InBev’s strong position in Latin American markets with that of SABMiller in Africa.

Carlos Brito, AB InBev’s chief executive, said: “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“. 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.

SABMiller shares were up 0.9% at 36.54 pounds in trading Wednesday, while AB InBev’s were 1.4% higher at 99.42 euros.

However, there was no public statement from the Santo Domingos, and shortly after it detailed its approach, InBev was forced by the Takeover Panel to clarify that it “does not now have the support” of the family for its offer. The two companies together own more than 40 per cent of SABMiller. Subject to finalization of terms, Altria would be prepared to elect the partial share alternative.

The broker’s analyst Phil Carroll said: “We believe this represents a good deal for SABMiller shareholders and ultimately we expect a deal to be agreed, although the dance could continue for a while yet”. UK’s takeover rules require A-B InBev to reveal its intentions by October 14.

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 comes back with yet another very bad…it’ll have to be one at a higher price… what does this mean for consumers… the two week price is then likely to reminiscence competition authorities are watching the deal closely…