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Anheuser-Busch Turns Up the Tap on SABMiller

Oct. 8, 2015
The largest brewer in the world upped its offer to $103 billion and was rejected--but a deal may be in the works.

LONDON—The world's biggest brewer, Anheuser-Busch InBev, turned up the heat Thursday on SABMiller urging the British rival's shareholders to accept a new $103-billion takeover bid despite fierce opposition from management.

Belgian-Brazilian titan AB InBev, which produces Budweiser and Stella Artois lagers, issued the appeal a day after launching its third takeover tilt at the London-listed maker of Foster's and Grolsch.

The improved bid -- pitched at £42.15 per share and worth £68 billion or 92 billion euros -- was rejected by the SABMiller board as being too low.

But US tobacco giant Altria -- which owns 27% of SABMiller -- called on the British group Wednesday to engage promptly and agree terms.

"Our proposal creates significant value for everybody," said AB InBev chief executive Carlos Brito in Thursday's statement.

"If shareholders agree that we should be in proper discussions, they should voice their views and should not allow the board of SABMiller to frustrate this process and let this opportunity slip away."

AB InBev said the rejection "lacked credibility" given that the offer represented a premium of about 44% to SABMiller's closing share price on September 14 when reports of takeover talks first emerged.

The brewer also noted that Marlboro cigarette maker Altria "has publicly stated that it supports our proposal".

'Corporate Dating Game'

Jeremy Cunnington, alcoholic drinks analyst at Euromonitor International, said the two giants appeared to be taking part in a high-stakes "dating game".

A blockbuster deal -- combining the world's top two alcoholic drinks companies by sales volumes -- would create a global megabrewer worth about 220 billion euros ($250 billion).

“It is simply the next stage of the corporate dating game, with both companies trying to get the best deal for their shareholders," Cunnington told AFP.

"Here, AB InBev is trying to put pressure on the SABMiller board to be more reasonable by getting shareholders to apply pressure.

"We fully expect within the next week for AB InBev to make a better offer and in all likelihood the deal to be completed.”

SABMiller had already rejected InBev's previous offers that were pitched at £38 and then £40 per share.

"Clearly frustrated with SABMiller’s insistence that the previous offers for the company have ‘very substantially’ undervalued its worth, Anheuser-Busch InBev, in a rather hostile act, has urged SAB’s shareholders to ‘voice their views’ if they want a merger to go ahead," said Spreadex analyst Connor Campbell.

"The Belgian drinks behemoth is attempting to publically pressure the Santo Domingo family -- who have a 14% stake in SAB -- into accepting a deal that the Altria Group has already emphatically put its weight behind," he added.

Craft Beer Boom

The big brewers are looking for tie-ups to offset the inroads made by small independent brewers catering to local demand for craft beers and other less brand-heavy products.

SABMiller earlier this year bought London-based craft beer company Meantime for an undisclosed sum, as big players in a saturated beer market eye opportunities in the fast-growing segment.

In Thursday deals, SABMiller shares finished 0.22% higher at £36.41 on London's benchmark FTSE 100 index, which ended 0.61 percent up at 6,374.82 points.

In Brussels, AB InBev's share price sank 1.17% to 97.50 euros.

Copyright Agence France-Presse, 2015

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