Anheuser-Busch InBev NV agreed to buy SABMiller Plc for almost £69 billion ($106 billion), raising its bid after several rejections to clinch a record industry deal that will bring one out of every three beers sold worldwide under a single company.
The Budweiser-maker will pay £44 a share in cash for a majority of the shares in its nearest competitor, the companies said in a recent statement, gaining brands such as Peroni and Grolsch and giving it control of about half the industry’s profit. SABMiller shares rose as much as 9.4 per cent to £39.62 in early London trading.
“We think that this is good value for SAB,” said Alicia Forry, an analyst at Canaccord Genuity. “It’s great that they’ve come to a point where the valuation is agreed, and we expect ABI in due course to make a firm offer.”
After years of speculation, the deal has been hastened by the impact of slowing economies in the emerging markets of China and Brazil. A 20-per-cent drop in SABMiller shares in the months preceding AB InBev’s approach and the prospect of an end to cheap credit also served as catalysts to a takeover. The agreement, which is tentative, caps more than two weeks of back-and-forth negotiations over the price. SABMiller said that its board is prepared to recommend the deal.
SABMiller shares traded at £39.51 at 8.13 a.m. in London. The offer price is 50 per cent above the closing value on 14 September, the day before takeover speculation resurfaced. AB InBev rose 3.7 per cent to €102 in Brussels.
The takeover would be the largest in UK history, surpassing this year’s £47-billion purchase of BG Group Plc by Royal Dutch Shell Plc.
Under UK takeover rules, AB InBev has until 5 p.m. Wednesday to make a formal offer, but the companies have agreed to seek a two-week extension of that, to 5 p.m. London time on 28 October, giving them time to formalise the agreement. AB InBev agreed to pay a fee of $3 billion if it fails to get approval from regulators and shareholders for the purchase. The new company will be incorporated in Belgium.
SABMiller’s two largest shareholders, Altria Group, Inc. and Bevco Ltd, can receive cash and stock valued at £39.03 a share for their stakes, which account for 41 per cent of the company. They won’t be able to sell the shares for five years, and will have the right to nominate directors.
The UK brewer spurned previous proposals, including one that AB InBev made public on 7 October, which valued the company at about £65.2 billion.
Together, AB InBev and SABMiller will be the world’s largest consumer-staples company by earnings, according to Exane BNP Paribas analysts, who estimate that the combined company will make $25 billion before interest, tax, depreciation and amortisation in 2016. The enlarged brewer will have the number-one or -two positions in 24 of the world’s 30 biggest beer markets, they estimate.
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