SABMiller board divided over AB InBev’s £65bn takeover proposal — From the FT

It looks like AB InBev, which makes beers like Budweiser and Corona, is going to have a fight on its hands – SAB says a similar bid was rejected on Monday because it was “very substantially undervaluing SABMiller”.

‘AB InBev believes that this revised proposal should be highly attractive to SABMiller shareholders and provides an extremely compelling opportunity for them’.

A-B InBev CEO Carlos Brito told reporters during a conference call that his company, the world’s largest brewing company, chose to go public with its latest offer after SABMiller refused to negotiate.

Shares in SABMiller rose 1.1 percent in lunchtime trading in Europe, while AB InBev gained 2 percent.

Sector analysts note that the cash offer represents a premium of close to 44% to SABMiller’s closing share price of £29.34 on September 14th. SABMiller’s largest shareholder, Altria Group., with a 27pc stake, said that it supported the approach. SABMiller said the offer undervalued the London-based brewer.

But SABMiller said the £42.15 a share offer “still very substantially undervalues SABMiller, its unique and unmatched footprint, and its standalone prospects”.

SABMiller shares leapt 3% higher after AB InBev said it had put forward a third proposal at £42.15 a share to create a global beer giant worth more than £180 billion.

Under this offer shareholders would get 2.37 pounds a share plus 0.48 special unlisted AB InBev shares which are convertible into ordinary stock after a five-year lock-up period. Altria urged SABMiller’s board to engage “promptly” with AB InBev.

SABMiller added that its statement was released “without the prior agreement or approval of AB InBev”.

This latest deal implies a blended average offer price of £40.23 per share for SABMiller. BevCo didn’t immediately respond to a request for comment.

The proposal was a precursor to a formal and binding offer that AB InBev has until next Wednesday to present to SABMiller. However, SAB’s biggest shareholder, tobacco company Altria, which owns 27pc of the brewer and has three board members, came out in support of AB InBev’s bid. The company said it would be prepared to elect the partial-share alternative.

Together, they would cover “virtually every major beer market”, it said, including the emerging markets of Africa, Asia and Latin America.

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

A deal at that price would value SABMiller at £71.7bn, or just under R1.5-trillion.

A key attraction of SAB is its significant operations in Africa, a fast-growing and lucrative market where AB InBev essentially has no presence. Another potential regulatory headache is China, where AB InBev had an estimated 14% volume market share past year, according to Euromonitor.