Beer
Fourth bid for SABMiller from AB InBev
The new offer ups the deal to £43.50 a share with a cash and partial share deal on the table in a bid to ensure both of SABMiller's largest shareholders are behind it.
Currently, one of the big shareholder groups, the tobacco firm Altria, has signalled that a deal would 'create significant value' for SABMiller shareholders, but the other party, BevCo, is yet to put support behind a bid from AB InBev.
Yet again the bid is not a formal offer, and now leaves Bud and Stella brewer AB InBev with two days to approach the company in such a fashion, or walk away from attempting to purchase SABMiller.
A statement by AB InBev detailed the plans and also included the line that there 'can be no certainty' that a formal offer will be made at some point in the future.
The long-running saga would see the two biggest brewers in the world merge - themselves the creation over several decades of a number of other large brewers.
It is unclear how a potential merger would work, especially considering SABMiller's tie-up in the USA with Molson Coors - and it is unlikely that a potential mega-brewer would be able to sell 7 out of 10 US beers without divestment of some products. There are also European and UK competition laws to consider.
AB InBev has until 5pm on Wednesday to formally announce its plans - or back out of the proposed purchase.
Comment
John Colley of Warwick Business School is a former CEO of a FTSE 100 company and researches large takeovers.
"Ab InBev is being forced to transfer many of the synergy benefits to SABMiller’s shareholders through constantly raising the price. They have clearly been structuring the offer to suit the two main shareholders who face a major tax bill if the consideration is paid in cash.
"The offer is partially unlisted shares, which will allow shareholders to take profits at some stage in the future. However, in all bids a time comes when the bidder has to stand behind the offer, and force the shareholders to make a decision. Unless AB InBev does so soon all the future synergy benefits will be lost to SAB Miller’s shareholders.
"AB InBev's determination to do this deal may ultimately be a problem for them. Advisor fees will run to hundreds of millions of pounds, much of which will be success-based. How much impartial advice do you get when the stakes are so high? Management will expect to benefit as they will preside over a much greater business resulting in greater pay, power and status. Customers are unlikely to benefit and shareholders' ultimate prospects are distinctly risky.
"The global beer market overall is largely flat and in some regions is declining as other beverages such as wine continue to penetrate. Micro-brewers and their highly differentiated cask ales also continue to make progress. As a consequence cost, product and distribution rationalisation become an attractive way of increasing shareholder returns. That is provided AB InBev does not pay too much for SABMiller."
