SABMiller snubs AB InBev again, says S$142 billion proposal too low

SABMiller Plc has 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.
SABMiller Plc has 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.PHOTO: BLOOMBERG

LONDON (BLOOMBERG) - 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 approach, made public on Wednesday after two weeks of closed-door discussions, raised the stakes in the back-and- forth battle over combining the world's two largest beermakers. A merger would create a beverage empire controlling the No. 1 or 2 positions in 24 of the world's 30 biggest beer markets, according to Exane BNP Paribas.

As with the previous offers from the maker of Budweiser, this one had two tiers: AB InBev would pay 42.15 pounds a share in cash for a majority of the stock. The price is 44 percent above London-based SABMiller's closing level on Sept. 14, the day before renewed speculation about a deal, AB InBev said in a statement Wednesday. AB InBev proposes paying a lower price, 37.49 pounds a share, in cash and stock for the stakes held by SABMiller's two biggest shareholders.

"This is not, in our view, intended as ABI's concluding proposal," said James Edwardes Jones, an analyst at RBC Capital Markets. "But it is likely to put pressure on SAB's management to engage and at least there is now a formal proposition to discuss." SABMiller's largest shareholder, Altria Group Inc., with a 27 percent stake, said in a statement that it supported the approach. Altria urged SABMiller's board to engage "promptly" with AB InBev.

SABMiller rose 1.1 percent to 36.60 pounds at 1:40 p.m. in London. AB InBev gained 1.8 percent to 99.86 euros.

SABMiller, the world's No. 2 beermaker, has already rejected two proposals made privately of 38 pounds a share and 40 pounds a share, it said. Under U.K. takeover law, Leuven, Belgium-based AB InBev has until Oct. 14 to make a formal offer or it must walk away, and if it doesn't bid it can't renew its takeover effort for six months.

SABMiller's board, excluding representatives of Altria, said in a statement Wednesday that the proposal "substantially undervalues" the brewer.

"We continue to work towards a recommended transaction, it's just that after a couple weeks trying the private route we didn't get any meaningful engagement from the board and with the deadline approaching we felt it was important for SABMiller shareholders to understand the compelling opportunity and look at our proposal," AB InBev Chief Executive Officer Carlos Brito said on a conference call.

SABMiller can create more value by remaining independent and pursuing growth in emerging markets such as Africa and Latin America, the company said.