InBev tells SABMiller: Don’t let beer giant merger die

Anheuser-Busch InBev is apparently not giving up on its bid for SABMiller.

While AB InBev’s cash offer of 42.15 per share would give SAB a market value of 68 billion pounds, the company would only really pay 65 billion pounds because of an alternative discounted offer of cash and shares, designed for Altria and BevCo.

Altria, SAB Miller, said “has publicly stated that it supports our proposal and “urges SABMiller’s board to engage promptly and constructively with AB InBev to agree on the terms of a recommended offer”.

“Stomach muscle InBev is frustrated that the leading group of SABMiller has rejected both of these earlier methodologies with no important engagement”, said the brewer. The company argues that the bid is more than fair, given it’s a 44% above SABMiller’s share price in mid-September when takeover talks were first made public.

“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”, SABMiller Chairman Jan du Plessis.

SABMiller said before Wednesday that AB InBev had timed the introductory way to deal with exploit SABMiller’s as of late discouraged share price, that the proposals’ structure victimizes a few SABMiller shareholders, and that AB InBev hasn’t offered it solace on the noteworthy administrative obstacles in the U.S.

AB InBev also disputed SABMiller’s contention that antitrust authorities might block the deal.

In turning down the bid, SABMiller said the proposal for £42.15 per share “still very substantially undervalues SABMiller, its unique and unmatched footprint, and standalone prospects.”

Brito is also facing the problem that SABMiller’s two major shareholders, Altria of the U.S. and BevCo, owned by Colombia’s Santo Domingo family, appear to be split on AB InBev’s approach. But just as importantly, we think the BUD multiple will move up given the various strategic benefits (especially in emerging Asia, including China, the world’s largest beer market). The combined group would generate annual revenue of £64bn, and earnings before interest, tax, depreciation and amortisation of £24bn. “SABMiller clearly has a figure in mind and it is going to take AB InBev digging out its wallet and taking on a bit more debt to win SABMiller’s hand”. SABMiller’s brands include Miller Lite, Peroni, and Grolsch.

The company said last month that it’s closing its brewery in Eden, North Carolina, partly because of the volume lost due to “economic challenges, an explosion of choice and fragmentation within the beer business, and a dramatic change in the way consumers engage with brands”.