Beer giant says no to $144b takeover

LONDON • SABMiller rejected an informal takeover offer from Anheuser-Busch InBev NV of about £66.4 billion (S$144 billion) that it considered too low, according to people familiar with the matter.

The initial proposal to the brewer of Peroni and Foster's beer, made last week, was worth slightly over £40 a share, while its executives and some shareholders regard a deal at closer to £45 as a fair value, the people said, asking not to be identified as details of the negotiations were not made public.

A deal at £45 per share would value SABMiller at about £73 billion, and would be the largest merger this year.

London-based SABMiller communicated to AB InBev the terms at which it would be willing to negotiate after the rejection, one of the people said. No final decision has been made on a potential formal offer, and it is possible the Belgian producer of Budweiser and Stella Artois may walk away from a deal, they said.

SABMiller shares fell as much as 3.9 per cent and traded down 2.3 per cent at 3,677 pence at 11.08am in London. AB InBev was little changed at €98.16. Representatives for AB InBev and SABMiller declined to comment.

SABMiller yesterday released a surprise trading update nine days earlier than planned, in which it announced that beer volume had returned to growth in the second quarter, helped by Africa and Latin America - a trend that could figure into a sweetened offer from AB InBev.

"I don't think this is a normal type of trading statement, it's been conveniently brought forward and I don't think that's going to be missed by the market," Mr Javier Gonzalez Lastra, an analyst at Berenberg, said in a phone interview.

If successful, the combination would create a dominant global player in the brewing industry, which has been re-aligned through a decade of increasingly large mergers, and attract heavy scrutiny from antitrust regulators around the world.

Controlled by a group of wealthy Brazilian investors led by Mr Jorge Paulo Lemann, AB InBev is itself the result of deals to unite major Belgian, American and Latin American brewers.

AB InBev had already reached out to Altria Group, SABMiller's biggest shareholder, before it announced plans to make a bid for its rival, people with knowledge of the matter said last month.

It is lining up lenders, including Bank of America and Banco Santander SA, to arrange as much as $70 billion in financing for its takeover proposal, sources said last week.

Under British takeover rules, AB InBev has until 5pm on Oct 14 to make an offer or announce it does not intend to proceed. SABMiller may also ask regulators for an extension to that deadline.

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A version of this article appeared in the print edition of The Straits Times on October 07, 2015, with the headline 'Beer giant says no to $144b takeover'. Print Edition | Subscribe