Megabrew: AB InBev says SABMiller’s latest offer rejection “lacks credibility”

After the Belgian beer giant boosted its offer to purchase SABMiller, its largest rival, SABMiller rejected the $104 billion cash bid Wednesday, saying AB InBev “still very substantially” undervalues the maker of Miller Lite and Coors.

The company said in a statement it would pay 42.15 pounds in cash per SABMiller share, having already made two prior offers at 38 and 40 pounds.

Earlier, ABI had said it was disappointed at SABMiller’s rejection of its first two bids “without any meaningful engagement”. The latest offer is 44 percent higher than SABMiller’s mid-September closing price on the day before speculation emerged about a deal.

The statement from the from claimed it anticipated that most SABMiller shareholders would accept the higher cash offer.

“The Board, excluding the directors nominated by Altria Group Inc., has unanimously rejected the … proposal as it still very substantially undervalues SABMiller, its unique and unmatched footprint, and its standalone prospects”.

It was the third recent offer by A-B InBev to SABMiller’s board, and the third rejected.

“Notwithstanding our good faith efforts, the board of SABMiller has refused to meaningfully engage with us”. Shares of AB InBev were up about 4%.

It would add Africa and certain Latin American and Asian breweries to AB InBev’s extensive presence across the Americas and add SABMiller’s Peroni, Grolsch, Pilsner Urquell and other global brands to AB InBev’s existing line-up which includes Budweiser, Stella Artois and Corona.

AB InBev said its proposal to buy the company was a great deal for SABMiller investors.

The board says the structure of the proposals “discriminates against the substantial proportion of SABMiller shareholders, who may not be able to hold unlisted shares”.

On Thursday, AB InBev Chief Executive Carlos Brito turned up the heat on SABMiller by directly addressing shareholders in a statement.

There was no outright rejection that a merger is possible, so it remains possible that AB InBev could find a more genial response if it raises its offer further.

Another potential regulatory headache is China, where AB InBev had an estimated 14 percent volume market share previous year, according to Euromonitor.

As a combined company, the group sees revenues of $64 billion and Earnings Before Interest, Tax, Depreciation and Amortization or EBITDA of $24 billion.

SABMiller toasted a strong summer for beer sales yesterday despite a “material” currency hit. “An irrevocable from them is a precondition”, Brito said. Subject to finalization of terms, Altria would be prepared to elect the partial share alternative.