Under the terms of the ‘possible offer’, SABMiller shareholders would be entitled to receive £44 per share, with a partial share alternative (‘PSA’) available for approximately 41% of the SABMiller shares.
The creation of this so-called 'Megabrew' represents one, if not the, largest takeover in the history of the drinks industry. The further consolidation of the brewing industry, which would mean one company owning huge international brands such as Budweiser, Stella Artois, Becks, Grolsch and Peroni.
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).
The PSA consists of 0.483969 unlisted shares and £3.7788 in cash for each SABMiller share, equivalent to a value of £39.03 per SABMiller share on October 12, 2015, representing a premium of approximately 33% to the closing SABMiller share price of £29.34 as of September 14,2015.
The PSA comprises up to 326 million shares, which will be available for approximately 41% of the SABMiller shares. These shares would take the form of a separate class of AB InBev shares (‘Restricted Shares’).
The SABMiller board has indicated to AB InBev that it would be prepared unanimously to recommend the all-cash offer of £44 per SABMiller share to SABMiller shareholders, subject to their fiduciary duties and satisfactory resolution of the other terms and conditions of the Possible Offer.
Bloomberg’s Paul Jarvis said: “Anheuser-Busch InBev NV agreed to buy SABMiller Plc for £68 billion (US$104bn), raising its bid to clinch a record industry deal that brings one out of every three beers sold worldwide under a single company.
“The Budweiser maker offered 4,400 pence a share in cash for a majority of the shares in its nearest competitor, gaining brands such as Peroni and Grolsch, and giving it control of about half the industry’s profit. The price is 46% above SABMiller’s closing value on Sept. 15, the day before the companies disclosed they were in contact about a potential bid.
“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% drop in SABMiller shares in the months preceding AB InBev’s approach and the prospect of an end to cheap credit also served as a catalyst to a takeover.
“The agreement, which is tentative, caps more than two weeks of back-and-forth negotiations over the price. SABMiller said its board is prepared to recommend it. SABMiller shares fell 1.3% to 3,621.50 pence in London Monday. AB InBev was little changed at €98.35 in Brussels.
“SABMiller spurned previous proposals, including one AB InBev made public on October 7 that valued the company at about £65.2bn.
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% of the company,” said Jarvis
Euromonitor International’s senior analyst – alcoholic drinks, Jeremy Cunnington, told Drinks International: “It is of little surprise that the acquisition has been completed, the corporate dating game in brewing invariably does. The deal creates a global giant accounting for 29% (assuming US and China divestments) of the 200 billion litre global volumes, more than three times bigger than its nearest rival, Heineken. With all the major M&A targets now taken, and M&A so important to brewers’ growth, it raises the question of where next for global brewers as they bid to carry on growing.”
Cunnington also adds: “There could be an issue in the premium lager segment in the UK as the companies combined volumes account for 50% of that price segment but it depends on how the competition authorities look at the market. However at a total market level there should be no competition issues as the market is already (and rarely in global brewing) competitive with four major players,” he concluded.