The Anheuser-Busch InBev (AB InBev) courtship of SABMiller turned sour yesterday, raising doubt over the bid to create a brewing behemoth.
The rejection by SABMiller of AB InBev’s third informal offer also raised the possibility that the pursuit might turn hostile.
And as the brewers’ war heated up‚ SA’s Public Investment Corporation (PIC) appeared to keep its options open‚ saying it would take its cue from SABMiller’s board.
AB InBev published a proposal to buy SABMiller for £42.15 (about R870) per share on Tuesday, valuing the company at £71.7-billion‚ or R1.5-trillion. Investors would have a choice between stock in the combined entity‚ or cash. SABMiller’s board immediately rejected the offer‚ saying it substantially undervalued the company.
But the PIC said that its key concern‚ that a listing on the JSE be retained‚ had been addressed. PIC chief executive Daniel Matjila said: “We believe that the SABMiller board should lead investors on this matter. AB InBev has made the right noises.”
The PIC owns about 3% of SABMiller’s 1.6 billion shares‚ and its warming up to the deal came after a phone call to Carlos Brito‚ the chief executive of AB InBev chief executive Carlos Brito‚ yesterday morning. “I spoke to him and our concerns were resolved‚” said Matjila.
On a conference call with the media‚ Brito said Johannesburg would serve as the regional headquarters of the combined group. The new entity would also respect and enhance the black economic empowerment programmes initiated by SABMiller.
SABMiller’s third rejection of a proposal from AB InBev‚ that would have created the world’s largest brewer‚ could be an attempt to bargain for a higher price from the Brussels-based company. But it also opens it up to a hostile bid in which AB InBev could directly approach SABMiller’s shareholders with an offer for their stock.
“It’s not impossible that AB InBev will go hostile and take the offer directly to shareholders because the board has rejected it‚” said Wayne McCurrie‚ a portfolio manager at Momentum Asset Management.
McCurrie did not foresee AB InBev offering more than the £42.15 per share‚ which represented a 44% premium on SABMiller’s share price of £29.34 on September 14‚ “given that they had upped their offer twice”.
Analysts from BNP Paribas in London also hinted at the possibility of the proposal turning hostile‚ but cautioned: “We are not sure it is a very bright idea to go hostile here – it is complex enough as it is. We think they may have to cough up more to get the board to engage or walk away.”
In its statement rejecting the offer‚ SABMiller hinted that its board was divided.
It said the board‚ “excluding the directors nominated by Altria Group”‚ rejected the offer. Tobacco company Altria owns 27% of the brewer’s stock‚ making it the largest investor.
In a separate statement Altria said it believed “that a combination of these two companies would create significant value for all SABMiller shareholders”.
It unequivocally said it supported the £42.15 per share offer “or higher” and would elect to take shares in a combined entity‚ instead of cash.
“Altria urges SABMiller’s board to engage promptly and constructively with AB InBev to agree on the terms of a recommended offer‚” it said.
Matjila would not be drawn on what it would take for the PIC to accept a bid for its SABMiller stock. He did‚ however‚ indicate that the PIC would consider a higher bid.
“We do have our own price in mind‚ but we’ll let the SABMiller board lead shareholders on this matter‚” said Matjila.
Brito claimed to also have the support of the Santo Domingo family‚ which controls about 15% of SABMiller through an entity called BevCo. “We have had extensive discussions with BevCo. We expect to have their support. There is no transaction without them‚” he said.
“We designed the instrument with and for the two largest shareholders, Altria and BevCo.”
If BevCo confirmed its support for the bid‚ its vote would boost AB InBev as together with Altria they speak for over 40% of SABMiller. The AB InBev proposal is a precursor to a firm and binding offer‚ which it has until next Wednesday to table‚ in terms of the merger rules governing companies in the UK‚ where SABMiller has its headquarters and a primary listing on the London Stock Exchange.
AB InBev said it went public with its proposal after it failed to have a “meaningful engagement” with the SABMiller board.
Brito said two offers were rejected without being presented to SABMiller’s investors.
“Without any meaningful engagement we felt there was nothing more that could be done privately and with the deadline looming we felt the need to put the offer to shareholders‚” said Brito.
“We thought SABMiller shareholders should know what is being discussed. AB InBev is disappointed that the board of SABMiller has rejected both of these prior approaches without any meaningful engagement.”
SABMiller chairman Jan du Plessis said the company did not need AB InBev: “AB InBev needs SABMiller but has made opportunistic and highly conditional proposals‚ elements of which have been deliberately designed to be unattractive to many of our shareholders.”
Du Plessis said SABMiller was uniquely positioned to continue to generate decades of standalone future volume and value growth “from highly attractive markets”. — BDLive
Bid rejection may spark beer war
The rejection by SABMiller of AB InBev’s third informal offer also raised the possibility that the pursuit might turn hostile.
And as the brewers’ war heated up‚ SA’s Public Investment Corporation (PIC) appeared to keep its options open‚ saying it would take its cue from SABMiller’s board.
AB InBev published a proposal to buy SABMiller for £42.15 (about R870) per share on Tuesday, valuing the company at £71.7-billion‚ or R1.5-trillion. Investors would have a choice between stock in the combined entity‚ or cash. SABMiller’s board immediately rejected the offer‚ saying it substantially undervalued the company.
But the PIC said that its key concern‚ that a listing on the JSE be retained‚ had been addressed. PIC chief executive Daniel Matjila said: “We believe that the SABMiller board should lead investors on this matter. AB InBev has made the right noises.”
The PIC owns about 3% of SABMiller’s 1.6 billion shares‚ and its warming up to the deal came after a phone call to Carlos Brito‚ the chief executive of AB InBev chief executive Carlos Brito‚ yesterday morning. “I spoke to him and our concerns were resolved‚” said Matjila.
On a conference call with the media‚ Brito said Johannesburg would serve as the regional headquarters of the combined group. The new entity would also respect and enhance the black economic empowerment programmes initiated by SABMiller.
SABMiller’s third rejection of a proposal from AB InBev‚ that would have created the world’s largest brewer‚ could be an attempt to bargain for a higher price from the Brussels-based company. But it also opens it up to a hostile bid in which AB InBev could directly approach SABMiller’s shareholders with an offer for their stock.
“It’s not impossible that AB InBev will go hostile and take the offer directly to shareholders because the board has rejected it‚” said Wayne McCurrie‚ a portfolio manager at Momentum Asset Management.
McCurrie did not foresee AB InBev offering more than the £42.15 per share‚ which represented a 44% premium on SABMiller’s share price of £29.34 on September 14‚ “given that they had upped their offer twice”.
Analysts from BNP Paribas in London also hinted at the possibility of the proposal turning hostile‚ but cautioned: “We are not sure it is a very bright idea to go hostile here – it is complex enough as it is. We think they may have to cough up more to get the board to engage or walk away.”
In its statement rejecting the offer‚ SABMiller hinted that its board was divided.
It said the board‚ “excluding the directors nominated by Altria Group”‚ rejected the offer. Tobacco company Altria owns 27% of the brewer’s stock‚ making it the largest investor.
In a separate statement Altria said it believed “that a combination of these two companies would create significant value for all SABMiller shareholders”.
It unequivocally said it supported the £42.15 per share offer “or higher” and would elect to take shares in a combined entity‚ instead of cash.
“Altria urges SABMiller’s board to engage promptly and constructively with AB InBev to agree on the terms of a recommended offer‚” it said.
Matjila would not be drawn on what it would take for the PIC to accept a bid for its SABMiller stock. He did‚ however‚ indicate that the PIC would consider a higher bid.
“We do have our own price in mind‚ but we’ll let the SABMiller board lead shareholders on this matter‚” said Matjila.
Brito claimed to also have the support of the Santo Domingo family‚ which controls about 15% of SABMiller through an entity called BevCo. “We have had extensive discussions with BevCo. We expect to have their support. There is no transaction without them‚” he said.
“We designed the instrument with and for the two largest shareholders, Altria and BevCo.”
If BevCo confirmed its support for the bid‚ its vote would boost AB InBev as together with Altria they speak for over 40% of SABMiller. The AB InBev proposal is a precursor to a firm and binding offer‚ which it has until next Wednesday to table‚ in terms of the merger rules governing companies in the UK‚ where SABMiller has its headquarters and a primary listing on the London Stock Exchange.
AB InBev said it went public with its proposal after it failed to have a “meaningful engagement” with the SABMiller board.
Brito said two offers were rejected without being presented to SABMiller’s investors.
“Without any meaningful engagement we felt there was nothing more that could be done privately and with the deadline looming we felt the need to put the offer to shareholders‚” said Brito.
“We thought SABMiller shareholders should know what is being discussed. AB InBev is disappointed that the board of SABMiller has rejected both of these prior approaches without any meaningful engagement.”
SABMiller chairman Jan du Plessis said the company did not need AB InBev: “AB InBev needs SABMiller but has made opportunistic and highly conditional proposals‚ elements of which have been deliberately designed to be unattractive to many of our shareholders.”
Du Plessis said SABMiller was uniquely positioned to continue to generate decades of standalone future volume and value growth “from highly attractive markets”. — BDLive
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