LONDON — Anheuser-Busch InBev increased the pressure on SABMiller on Wednesday to agree to a takeover, saying that it was now willing to pay about $ 104 billion for its rival.
The revised offer came after Anheuser-Busch InBev said that SABMiller's board of directors had rejected two other proposals that had not previously been publicized. SABMiller said on Wednesday that the prior approaches had undervalued the company.
SABMiller's board of directors, excluding directors nominated by Altria Group, its largest shareholder, also quickly rejected the latest proposal, saying in a news release that the revised bid "still very substantially undervalues SABMiller, its unique and unmatched footprint, and its stand-alone prospects."
Altria, the tobacco giant, said on Wednesday that it would be willing to support the latest approach, which includes an option for Altria and other investors to accept a portion of the offer in restricted shares, instead of cash.
Under the terms of the latest bid, Anheuser-Busch InBev said it would be willing to pay 42.15 pounds, or about $ 63.97, a share in cash for SABMiller, a 16 percent premium to the closing price in London on Tuesday. That is also a 44 percent premium to the closing price in mid-September, before Anheuser-Busch InBev confirmed it had approached SABMiller about a possible combination.
Timeline
Big Beer Deals
A deal between Anheuser-Busch InBev and SABMiller would be the latest merger of mass-market beer brands.
After the announcement, shares of SABMiller rose more than 3 percent in London. At midday, shares were up 1.2 percent at £36.66.
Anheuser-Busch InBev said last month that it had approached SABMiller about a takeover, and that it had offered in two written, private proposals to pay £38 a share and later £40 a share in cash. The £40-a-share proposal also included an option for investors to accept a portion in unlisted shares, SABMiller said.
"AB InBev is disappointed that the board of SABMiller has rejected both of these prior approaches without any meaningful engagement," the company said in a news release on Wednesday.
The brewing giant said it believed that "this revised proposal should be highly attractive to SABMiller shareholders and provides an extremely compelling opportunity for them."
SABMiller said that Anheuser-Busch InBev had broached the idea of making an offer of £42 a share, alongside the share alternative, at a meeting on Monday. But, it added, the SABMiller board, excluding directors nominated by Altria, determined that it would reject such a proposal.
"SABMiller is the crown jewel of the global brewing industry, uniquely positioned to continue to generate decades of stand-alone future volume and value growth for all SABMiller shareholders from highly attractive markets," Jan du Plessis, the SABMiller chairman, said in a news release.
"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," he added. "AB InBev is very substantially undervaluing SABMiller."
However, SABMiller may feel more pressure to agree to a combination as Altria, which owns about 27 percent of SABMiller's shares, expressed support for the revised offer and said it would be prepared to accept the alternative offer of shares instead of cash.
The share offer would consist of a restricted class of up to 326 million Anheuser-Busch InBev shares, which would be unlisted and convertible into regular Anheuser-Busch InBev shares after a five-year lockup period, Anheuser-Busch InBev said.
The Brands
Anheuser-Busch InBev and SABMiller are the world's largest brewers. Their brands include:
The share alternative, which would consist of up to 41 percent of SABMiller's shares, would value those shares at £37.49 a share. Altria and another large shareholder, BevCo Limited, together hold about 41 percent of the SABMiller shares.
After making its announcement early Wednesday, Anheuser-Busch later put out a news release to clarify that it "does not currently have the support" of BevCo, an investment vehicle for the Santo Domingo family of Colombia.
Altria said it believed that "a combination of these two companies would create significant value for all SABMiller shareholders."
"Altria urges SABMiller's board to engage promptly and constructively with AB InBev to agree on the terms of a recommended offer," the company said in a news release on Wednesday.
The deal, if it goes through, would create a combined company with $ 64 billion in annual revenue that commands 30 percent of global beer sales, according to the research firm Euromonitor International.
It also would bring some of the world's most popular beers under one roof, including Anheuser-Busch InBev's Budweiser, Corona and Stella Artois, and SABMiller's Miller Lite, Peroni Nastro Azzurro and Grolsch.
"Put simply, we believe we can achieve more together than each of us could separately, bringing more beers to more people and enhancing value for all of our stakeholders," Carlos Brito, the Anheuser-Busch InBev chief executive, said in a news release.
Any deal between the brewing giants would most likely face significant regulatory scrutiny, given the breadth of their combined beer brands and their dominance in the United States and in other countries.
On Wednesday, Anheuser-Busch InBev said that it believed the geographic footprints of the two companies were largely complementary and that it would work with regulators "in seeking to bring all potential regulatory reviews to a timely and appropriate resolution."
"In the U.S. and China, in particular, the company would seek to resolve any regulatory or contractual considerations promptly and proactively," Anheuser-Busch InBev said.
To win approval from the Justice Department in the United States and from regulators in Europe and China, the companies would almost certainly have to sell some brands or assets, possibly including SABMiller's 58 percent stake in its Miller Coors joint venture with Molson Coors Brewing Company in the United States, and its share of the CR Snow joint venture that owns Snow, China's best-selling beer brand.
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