AB InBev remains on course to take control of SABMiller

AB InBev remains on course to take control of SABMiller

Anheuser-Busch InBev has upped its offer for SABMiller to GBP79bn (US$103bn) after investor pressure forced it to sweeten its terms.

The Budweiser brewer today said it will pay an extra GBP8bn for SABMiller's shares. The revised cash consideration adds GBP1 to each SAB share, compared to the original GBP44 per share agreed last year.

The offer is "final" and will not be increased again, AB InBev said without giving a reason for the revision.

The move comes after activist investors took positions on SAB's share register last week with the aim of forcing AB InBev to agree a higher price for its takeover deal. The new investors claimed that the original deal, announced in November, was unfair to some shareholders in the wake of Sterling's fall against the US Dollar and Euro after last month's Brexit vote. Shareholders who took a partial share alternative - a combination of cash and stock - instead of a simple cash consideration for their stakes stood to gain from the currency fall.

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Investors argued that the stock alternative would mostly benefit SAB's two biggest shareholders, US tobacco company Altria and BevCo, the investment vehicle of the Santo Domingo brewing family.

SAB's share price rose following ABI's announcement: At 0934 BST today, they were trading 0.56% up on yesterday's close at GBP44.65.

Despite today's increase, the new price tag for SAB is lower in US dollar terms than the original offer was when it was agreed, because of the Sterling fall. The initially-agreed deal, for GBP71bn, was worth US$107bn at the time. But, according to one analyst this morning, the increase "does not materially change the deal economics" for ABI. The total cost to the company has been calculated as just over $2bn at spot exchange rates, said Bernstein today.

The partial share alternative is equivalent to a value of GBP51.14 per SAB share as of yesterday. Under the terms of the partial share deal, investors must hold on to the stake for a minimum of five years.

SAB confirmed that management spoke to AB InBev about the takeover last week, "in light of recent exchange rate volatility and market movements". There was "no discussion or agreement about the terms of today's revised offer", the company added.

The price increase should clear one of the last major hurdles for the SAB takeover. AB InBev has gained approval from anti-trust regulators in the US, the EU and South Africa and now only awaits a decision from China.

Expert analysis

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