SABMiller and AB InBev agree takeover plan
Under the terms of the new £68bn deal, SABMiller shareholders would be entitled to receive £44 per share in cash, with a partial share alternative (PSA) available for about 41% of the SABMiller shares.
The firms said in a joint statement: “The all-cash offer represents a premium of approximately 50% to SABMiller’s closing share price of £29.34 on September 14 2015 (being the last business day prior to renewed speculation of an approach from AB InBev).”
World’s largest brewer
The takeover of SABMiller, known for its Grolsch and Peroni brands, by the world’s largest brewer would create a brewing behemoth. The London-listed SABMiller has a global workforce of about 68,000 and was founded in South African in 1886.
AB InBev owns about 200 beer and malt beverage brands, including Budweiser, Corona, Stella Artois, Beck’s, Leffe and Hoegaarden.
Operating in North America, Latin America, Europe and the Asia Pacific, the business holds market leading positions in the US, Brazil and Mexico.
30% of the globe’s beer market
If the deal is approved, the mega-merger will account for about 30% of the globe’s beer market.
SABMiller had slammed previous offers from AB InBev as “very substantially undervaluing” the business. SABMiller chairman Jan du Plessis said earlier this month: “AB InBev needs SABMiller but has made opportunistic and highly conditional proposals, elements of which have been deliberately designed to be unattractive to many of our shareholders.”
If the deal goes ahead, the newly-created brewing giant will make about 30% of the world's beer.
The two firms now have until October 28, under the terms of a City timetable, to finalise a deal.
The analyst’s view
“AB InBev has paid a reasonably full price for SAB Miller which certainly passes some of the merger benefits to SAB Miller shareholders.
"AB Inbev shareholders will be hoping that it can extract the planned benefits and overall for once I would have said it is a decent deal for both shareholders as AB InBev probably will extract the synergies and consolidate a declining market. I say this because the majority of major acquisitions fail to extract planned synergies and more than half destroy value.
"That said AB InBev does have a good record with previous acquisitions. However, expect substantial redundancies and cost savings over the next year.
"Product ranges are also likely to be rationalised allowing greater investment in the retained brands. However for the customer one in three beers will be produced by AB InBev as a result of this merger which suggests less choice and less competition.”
- John Colley, of Warwick Business School, is a Professor of Practice, a former ceo of a FTSE 100 company and researches large takeovers.
