AB InBev raises SABMiller bid as investors worry over UK pound's fall

27 Jul 2016

Anheuser-Busch InBev NV yesterday raised its proposed $100 billion-plus buyout offer for SABMiller Plc in order to assuage its target shareholders concern over the valuation of the deal after the pound plunged after Britain's vote to exit the European Union (EU).

Shareholders of London-based SABMiller voiced concerns saying that the deal is now less attractive after the pound plunged in June due to Britain's decision to leave the EU.

In November, AB InBev clinched the deal after it raised its share and cash buyout offer to £70 billion, or $106 billion based on exchange rates at the time.

That original offer is now worth a total of around $100 billion due to the fall of the pound and the rise of ABInBev shares by around 35 per cent since the deal was finalised in November.

In a statement yesterday, ABInBev said that it would now pay £45, or $59, a share in cash, an increase of £1 from its earlier offer, taking the total offer price to £79 billion.

Shareholders of SABMiller, who opt for the cash-and-stock alternative, will now receive about £4.66 in cash compared with £3.78 earlier, with the balance in shares. The share alternative would be available for up to 41 per cent of SABMiller's shares.

ABInBev had earlier made the partial share offer in order to win the support of SABMiller's two largest shareholders, US tobacco giant Altria and the Santo Domingo family of Colombia, which allowed them to avoid a huge tax bill from the sale of their shares.

But some investors like Aberdeen Asset Management and Davidson Kempner Capital recently raised concerns about an increase in the value of the share alternative as the pound has fallen sharply since the June vote.

Around 20 per cent of SABMiller US investors who hold the company's floated shares, will get less in dollar terms if the pound continues to remain near its recent low against the US dollar when the deal closes.

Aberdeen Asset Management yesterday said in a statement that even the revised deal ''remains unacceptable'' because it undervalues the company and favors SABMiller's two largest shareholders.

ABInBev has already received regulatory approval for the deal from the EU, South Africa and the US and is awaiting approval in China after it entered into several agreements to sell assets from the combined company.

Separately, SABMiller said it was considering the revised offer and has hired Centerview Partners to provide additional financial advice alongside that of its existing advisers.

ABInBev, based in Belgium, is listed on the Brussels stock market, while its stock also trades in London, and its American depositary receipts trade in New York.