The Megabrew deal has got even frothier after beer giant AB InBev raised its offer for rival brewer SABMiller. The move reflects a fall in the pound after last month’s Brexit vote made the original offer less attractive to some SABMiller investors.
The new offer is an increase of £1 per share on the £44 originally proposed. The sweetened deal now values SABMiller at around £79bn, up from £70bn previously.
But SABMiller shareholder Aberdeen Asset Management immediately poured cold water on the improved offer, calling it “unacceptable” and maintaining that it undervalues the company while continuing to favour SABMiller’s two major investors.
SABMiller, maker of Pilsner Urquell, said it would now consult with shareholders and that “a further announcement will be made thereafter”.
The deal to create the world’s largest beer firm is expected go to a shareholder vote after it has cleared its last major anti-trust hurdle, in China. That could come later this year.
AB InBev’s arm was twisted to improve the offer by a band of activist investors who bought small stakes in SABMiller. The activists, US hedge fund Elliott Advisors, The Children’s Investment Fund and Sandell Asset Management, argued the fall in sterling reduced the value of their stake in the deal.
The way in which the deal is structured means that investors can receive either a cash component or a share of the new company. This agreement was designed specifically for SABMiller’s two biggest shareholders Altria and Bevco, who wanted to keep a stake in the new company.
SABMiller said the two brewing firms had discussed the deal last week “in light of recent exchange rate volatility and market movements”.
AB InBev, which also counts Stella Artois and Corona among its brands, said this latest offer was final.
The new offer represents a premium of approximately 53 per cent on SABMiller’s closing share price of £29.34 on 14 September 2015, the last day of trading before speculation about the merger caused shares to rocket.
“The latest £45 a share offer from AB Inbev was to be expected given the current depreciation in sterling post Brexit. With the disposal of SAB’s European operations along with its stake in MillerCoors and CR Snow JV the debt fears arising from the deal should be alleviated. The only regulatory review outstanding is approval from China and thus the merger to create this brewing behemoth would now seem a foregone conclusion,” said Andrea Williams, senior fund manager at Royal London Asset Management, an AB InBev investor.