Anheuser-Busch (AB) InBev has agreed to buy SABMiller for £68bn (about R1.4trn), 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 September 15, the day before the companies disclosed they were in contact about a potential bid.
“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% 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.
Under UK takeover rules, AB InBev has until 17:00 on Wednesday to make a formal offer, but the companies have agreed to seek an extension of that by two weeks, to 17:00 London time on October 28, to have time to formalise the agreement.
AB InBev agreed to pay a fee of $3bn if it fails to get approval from regulators and shareholders for the purchase. The new company will be incorporated in Belgium.
SABMiller shares fell 1.3% to 3 621.50 pence in London on Monday, and the stock closed on the JSE at R732.00. 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 and Bevco, can receive cash and stock valued at £39.03 a share for their stakes, which account for 41% of the company.