With two days to go before the deadline for AB InBev to 'put up or shut up', negotiations between the world’s two largest brewers have taken an increasingly combative turn as SABMiller puts up roadblocks to a takeover by its larger rival.
Shots were fired last week when Anheuser-Busch InBev made its offers public, and criticised the SABMiller board for “refusing to meaningfully engage with us.”
“How long will it be before shareholders see a value of over £42 in the absence of an offer from AB InBev?” said chief executive Carlos Brito.
SABMiller chairman Jan du Plessis volleyed with a statement saying AB InBev's offers “very substantially undervalue” the company, which he described as “the crown jewel of the global brewing industry,” and were “deliberately designed to be unattractive to many of our shareholders.”
The London brewer, which makes Peroni, hammered home its point about generating long-term revenue growth on Friday by announcing it was extending its cost-cutting target from $500m by 2018 to more than $1bn in 2020.
It was reported this weekend that AB InBev was considering increasing its offer to £43-£44 a share, but City A.M. understands that it won't go higher than that.
Sources close to the deal argue that SABMiller investors will get a far better deal with cash from AB InBev now, rather than waiting for the fruits of SAB's cost-cutting down the line.
They also say given AB InBev and 3G's impressive track record of takeovers (3G is the Brazilian buy-out giant that owns 22.7 per cent of InBev and earlier this year oversaw the merger of Kraft and Heinz), they are unlikely to overreach with their offer.
AB InBev has said it is focusing on winning over the two main shareholders: Altria, which owns the Malboro cigarette brand, and BevCo, the Colombian Santo Domingo family's holding company, which owns 14 per cent.
Altria, the largest shareholder in SABMiller with a 27 per cent stake, issued a statement last week saying it was in favour of AB InBev's latest offer of £42.15 a share and urged the rest of the board to “engage promptly and constructively with AB InBev to agree on the terms.” So now all eyes are on the Santo Domingo family.
Aberdeen Asset Management, which owns 2.7 per cent said on Friday it supported the board's decision to reject InBev's £65bn offer because it undervalued the company’s long-term potential.
Earlier last week South Africa's Public Investment Corporation came out and said it was against the merger as it would harm competition by creating a brewer that was too dominant.
While some papers said AB InBev was prepared to walk away from the deal, most analysts agree it will happen, but with the Wednesday 5pm deadline drawing near, the question is who will blink first?