SABMiller to recommend AB Inbev deal despite value shift

AB Inbev has said that its latest improved offer was "final".

Jan du Plessis, chairman of SABMiller, said: "The board's decision was "difficult given changes in circumstances since the board originally recommended £44 per share in cash last November".

Since last November, when the merger was agreed, the cash offer has become less attractive given the weaker value of the pound.

SABMiller is now understood to be considering the new takeover offer.

AB InBev's core profit in the second quarter rose 4.3% on a like-for-like basis to $4.01bn, below the average Reuters poll forecast of $4.13bn.

AB InBev raised its offer by £1 per share this week amid unrest among smaller SAB shareholders over the way the deal favours the two biggest shareholders.

AB InBev tabled the fresh deal in light of the collapse in the value of the pound following Britain's vote to leave the European Union.

At the heart of the confrontation is a complex two-pronged takeover proposal created to please both small and institutional investors as well as SAB's two biggest stakeholders, Altria Group Inc. and Bevco Ltd.

SABMiller managers asked employees to halt work knitting together the two companies, with Chief Executive Officer Alan Clark saying in an internal memo that "there should be no contact with AB InBev with immediate effect".

AB InBev raised its offer by £1 a share to £45 a share, valuing SABMiller at about £79bn, up from £70bn previously.

The pause is not an indication of the board's thinking, said one of the sources, who declined to be identified as the matter is private.

However, Aberdeen Asset Management, an SABMiller shareholder, has again said that the deal is unacceptable.

The board of London-based SABMiller proposed that its two biggest shareholders, Altria Group Inc. and Bevco Ltd., be treated as a separate class of stockholders and allow other SABMiller investors to vote on the new offer separately, the company said in a statement.

Buying SABMiller will give AB InBev access to the fast-growing African beer market as well as certain attractive Latin American markets like Peru and Colombia, while reducing its dependence on slower-growth markets like the USA and Brazil.

AB InBev has secured conditional regulatory approval in China, its final pre-condition for the deal. The $1.6 billion deal would give the government-controlled brewer SABMiller's 49% interest in the joint venture known as CR Snow and full ownership of Snow, the world's top-selling beer by volume.

  • Wendy Palmer