SABMiller Shoots Down 'Undervalue' A-B Merger Proposals

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SABMiller Shoots Down 'Undervalue' A-B Merger Proposals


LONDON — To date, all attempts to build the world's largest beer company have failed as SABMiller continues to reject Anheuser-Busch InBev's merger proposals.

A-B InBev proposed to buy SABMiller for £42.15 ($64.34) per share in cash. That valued SABMiller at £68.2 billion ($104 billion), or 44 percent higher than its share price before talk of a takeover began circulating in September, according to CNN Money. Prior to this, A-B InBev already had two other proposals at £40 ($61.07) and £38 ($58) per share rejected by SABMiller.

According to a statement by SABMiller, its board met formally to consider the latest $104-billion proposal by A-B InBev, defined as the GBP 42.15 Proposal.

"The board, excluding the directors nominated by Altria Group Inc., has unanimously rejected the GBP ​42.15 Proposal as it still very substantially undervalues SABMiller, its unique and unmatched footprint, and its standalone prospects," SABMiller said.

For its part, Richmond, Va.-based Altria, which owns a 27-percent stake in SABMiller, has thrown its support behind the latest bid.

"Altria believes that a combination of these two companies would create significant value for all SABMiller shareholders. Altria supports a proposal of £42.15 or higher, with a partial share alternative, and subject to finalization of terms, would be prepared to elect the partial share alternative," the company said. "Altria urges SABMiller's board to engage promptly and constructively with A-B InBev to agree on the terms of a recommended offer."

Wednesday morning's proposal, according to SABMiller, "is only GBP 0.15 higher than the GBP 42 Proposal considered and rejected on [Oct. 5]."

"SABMiller is the crown jewel of the global brewing industry, uniquely positioned to continue to generate decades of standalone future volume and value growth for all SABMiller shareholders from highly attractive markets," said Jan du Plessis, chairman of SABMiller. "A-B 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. A-B InBev is very substantially undervaluing SABMiller."

A-B InBev's Reaction

In a statement Wednesday, A-B InBev said it is disappointed that the board of SABMiller has rejected its prior approaches "without any meaningful engagement."

"A-B InBev believes that this revised proposal should be highly attractive to SABMiller shareholders and provides an extremely compelling opportunity for them. The cash proposal represents a premium of approximately 44 percent to SABMiller's closing share price of GBP 29.34 on [Sept. 14]," the company said, adding that Sept. 14 was the last business day prior to renewed speculation of an approach from A-B InBev. 

According to A-B InBev, "the revised proposal is designed to enable a compelling cash offer to be made to SABMiller's public shareholders and to provide a continuing attractive investment for Altria Group Inc. and BevCo Ltd., which A-B InBev believes will satisfy their financial requirements. 

"Importantly, the partial share alternative enables appropriate financing to be achieved and supports the cash offer at a higher price than A-B InBev would otherwise be able to offer," it added. 

According A-B InBev, a merger would result in "a truly global brewer that would take its place as one of the world's leading consumer products companies. Given the largely complementary geographical footprints and brand portfolios of A-B InBev and SABMiller, the combined group would have operations in virtually every major beer market, including key emerging regions with strong growth prospects such as Africa, Asia, and Central and South America."

In addition, a combined company would generate revenues of $64 billion and EBITDA of $24 billion. 

"We have the highest respect for SABMiller, its employees and its leadership, and believe that a combination of our two great companies would build the first truly global beer company," said Carlos Brito, CEO of Anheuser-Busch InBev. "Both companies have deep roots in some of the most historic beer cultures around the world and share a strong passion for brewing as well as a deep seated tradition of quality. By bringing together our rich heritage, brands and people, we would provide more opportunities for consumers to taste and enjoy the world's best beers. 

"We also both strive to have a positive impact on the communities in which we work and live as two of the world's leading corporate citizens. Put simply, we believe we can achieve more together than each of us could separately, bringing more beers to more people and enhancing value for all of our stakeholders," he added.