SABMiller Board Backs AB InBev's Higher Offer -- 3rd Update
July 29 2016 - 12:03PM
Dow Jones News
By Tripp Mickle
SABMiller PLC's board on Friday recommended that shareholders
approve Anheuser-Busch InBev NV's increased offer of GBP45 a share,
bringing an end to several turbulent weeks that jeopardized a more
than $100 billion combination of the world's largest brewers.
The board's decision to recommend the deal came on the same day
that Chinese regulators approved the merger. The approval by
China's Ministry of Commerce, which was expected, was the final
regulatory precondition AB InBev needed before moving forward with
the transaction.
AB InBev shareholders and SABMiller shareholders now must vote
on the deal, which is expected to close this year.
Shares of AB InBev, the world's largest brewer, rose 4.5% in
trading in Brussels, while SABMiller's shares added 2.3% in
London.
"In reaching its decision, the board has considered the best
interests of the company as a whole and has taken into account all
salient facts and circumstances. The board has also received
extensive shareholder feedback and considered the views of our
financial advisers," SABMiller Chairman Jan du Plessis said in a
statement. He called the decision as "difficult" and "challenging"
in the wake of last month's vote by the U.K. to leave the European
Union.
AB InBev on Tuesday raised its offer for SABMiller PLC to GBP45
a share, from GBP44 a share, trying to quell growing unease among
SABMiller shareholders after the British pound's plunge. The deal
became a target for activist investors and traders after the U.K.
voted to leave the European Union last month.
The sweetened offer won support from both of SABMiller's largest
shareholders, U.S. tobacco company Altria Group Inc. and Colombia's
Santo Domingo family. They both plan to take a cash-and-share
proposal that has come under fire in recent weeks after soaring in
value because AB InBev shares are priced in euros.
The rest of the board remained concerned about AB InBev's
sweetened offer in the wake of the British pound's plunge, a person
familiar with the matter said. In an effort to get an independent
opinion on the offer, Mr. du Plessis brought on Centerview Partners
Holdings LLC and offered it a flat fee to provide financial advice
on the new offer, a person familiar with the decision said.
At least two shareholders, including Aberdeen Asset Management
PLC, opposed the new offer, but as the week passed, other
shareholders embraced it. SABMiller shareholder Twin Capital
Management LLC Chief Executive David Simon supported it and said
those who opposed it were "being too shortsighted."
The board's recommendation clears the way for the shareholder
votes, the next step in the process. Mr. du Plessis said the
company will ask the U.K. court to have Altria and the Santo
Domingo family vote on the deal as a separate class of
shareholders.
AB InBev to sell SABMiller's China businesshas irrevocable
commitments in support of the offer from Altria and the Santo
Domingo family, as well as from SABMiller's own board of directors
with respect to their shares in the company, according to AB InBev
Chief Executive Carlos Brito.
Buying SABMiller will give AB InBev access to the fast-growing
African beer market as well as certain attractive Latin American
markets like Peru and Colombia, while reducing its dependence on
slower-growth markets like the U.S. and Brazil.
AB InBev had agreed in March to sell SABMiller's China business
to China Resources Beer Holdings Co. The $1.6 billion deal would
give the government-controlled brewer SABMiller's 49% interest in
the joint venture known as CR Snow and full ownership of Snow, the
world's top-selling beer by volume.
Taking over Snow would make China Resources the largest brewer
in China, with a 30% market share, according to industry tracker
Seema International Ltd. AB InBev has an estimated 18% market share
in China, while Tsingtao Brewery has 22%, Beijing Yanjing Brewery
Co. has 13% and Carlsberg A/S has 6%.
China's Ministry of Commerce is the fourth and final major
regulator to approve the combination of the world's two largest
brewers. The deal also was contingent upon approval in the U.S.,
Europe and South Africa.
Write to Tripp Mickle at Tripp.Mickle@wsj.com
(END) Dow Jones Newswires
July 29, 2016 11:48 ET (15:48 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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