Tuesday, July 26, 2016
The price tag on the biggest beer deal in the world just jumped thanks to Brexit
LONDON/BRUSSELS — Anheuser-Busch InBev raised its $100 billion-plus bid for its rival brewer SABMiller on Tuesday after a slide in the value of the pound following the British vote to exit the European Union made the offer less attractive for many investors, threatening to derail the deal.
SABMiller said its chairman had talked with his counterpart at AB InBev on Friday about the offer in the light of exchange-rate volatility and market movements.
The world's largest brewer will now offer 45 pounds a share for its nearest rival, an increase from the 44 pounds announced in October.
It has also tweaked the terms of an alternative share-and-cash structure designed for SABMiller's two largest shareholders, raising the cash element by 88 pence a share.
The offer values SABMiller at about 79 billion pounds, or $104 billion. In November, when the original bid was officially launched, it was worth about 70 billion pounds, or $106 billion based on exchange rates at the time.
AB InBev, which has hedged to cover the pounds initially required, said the revised terms were final.
SABMiller, which provisionally agreed the deal struck in October, said it would consult with shareholders, with a further announcement after that.
The takeover is still awaiting regulatory approval in China. SABMiller shareholders would expect to vote on it after that.
The changes come after numerous activist investors, such as Elliott, bought stakes in SABMiller and several shareholders voiced concerns at least week's annual general meeting that the cash deal was less attractive for many investors than before and, in any case, below the share-and-cash alternative.
The latter, designed exclusively for Altria and Colombia's Santo Domingo family who together own about 41% of SABMiller, had been worth less than the all-cash option last year but, with the fall of sterling and a rise of AB InBev shares, had surpassed it since.
The pound has dropped some 12% versus the dollar since the vote for a British exit from the EU, or Brexit. AB InBev shares are more than 35% higher than they were in October.
AB InBev said the share-and-cash offer value was now 51.14 pounds, above the 45 pounds of pure cash, but the new shares offered would have to be held for at least five years.
"I wouldn't like to second-guess what the activists were hoping for, but the increase is quite modest," one SABMiller shareholder told Reuters.
At 8:10 a.m. GMT, SABMiller shares were up 0.6% at 44.68 pounds. AB InBev's were up 0.3% at 115.1 euros.
(Additioanl reporting by Martinne Geller and Sinead Cruise; Editing by Mark Potter)