Megabrew: SABMiller urges shareholders to vote in favour of AB InBev merger

Francesca Washtell
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The board of British drinks giant SABMiller has recommended its shareholders "unanimously vote in favour" of Anheuser-Busch InBev's revised £45 per share offer.

The SABMiller board also intends to propose to the UK court that its two major shareholders, Altria and Bevco, be treated as a separate class of shareholders and therefore to allow other SABMiller investors to vote on AB InBev's new offer separately.

Earlier this week, AB InBev topped up the deal to £45 per share from the £44 a share offered last year.

The company's recommendation comes after the final regulatory pre-condition to the £79bn takeover was cleared this morning, when the Chinese ministry of commerce gave megabrew a conditional green light.

Read more: AB InBev offers to sell more SABMiller brands to secure Megabrew deal

It was previously cleared in the other key jurisdictions of the US last week, South Africa in June and the European Union in May.

SABMiller has faced growing criticism from activist shareholders, including US hedge fund Elliott and the Children's Investment Fund.

They argued the fall in Sterling since the Brexit vote reduced the value of their stake in their all-cash deal, compared to Altria and Bevco's cash and unlisted AB InBev share option.

Read more: AB InBev gulps down Italian craft brewer

In a statement today, SABMiller Chairman, Jan du Plessis, said:

The board's decision was difficult given changes in circumstances since the Board originally recommended £44 per share in cash last November. At that time we were satisfied that the 50 per cent premium to the undisturbed share price appropriately reflected the quality of the business and its long term prospects.

Since then, various factors have affected the value of the offer, most importantly the impact of the Brexit vote on the value of Sterling and the re-rating of comparable companies. This has made the board's decision more challenging, and we believe the final cash consideration of £45 per share to be at the lower end of the range of values considered recommendable.

The board has also received extensive shareholder feedback and considered the views of our financial advisers, including the recently appointed Centerview Partners.

We are cognisant that the partial share alternative initially stood at a discount to the cash consideration, but recent events have resulted in it now standing at a headline premium, before any illiquidity discount.

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