sabmiller rebuffs third sweetened offer from ab inbev 1514952015

The offer substantially undervalues SABMiller, its board says.

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By :  ,  Financial Analyst

Anheuser Busch Inbev SA (EBR:ABI) made a revised, infructuous offer for SABMiller plc (LON:SAB), this time taking the battle public.

“AB InBev has made two prior written proposals in private to SABMiller, the first at GBP 38.00 per share in cash and the second at GBP 40.00 per share in cash,” AB InBev said. “AB InBev is disappointed that the Board of SABMiller has rejected both of these prior approaches without any meaningful engagement.”

This third £65.2-billion (SG$140.4 billion) proposal offered to pay GBP 42.15 per share in cash, and was backed by Altria Group Inc (NYSE:MO), SABMiller’s largest shareholder.

AB InBev is seeking to build, through the acquisition of SABMiller, “the first truly global beer company.” At the same time it would allow AB InBev to get a stronger foothold in the African and Australian markets than it does now. According to analysts, the combined company would control as much as 31 per cent of the global beer market.

The latest offer cut no ice with the SABMiller board, however, which met and rebuffed it on the same day.

In a statement SABMiller said: “The Board of SABMiller has now met formally to consider the new proposal announced by AB InBev today… the Board, excluding the directors nominated by Altria Group Inc., has unanimously rejected [the proposal] as it still very substantially undervalues SABMiller, its unique and unmatched footprint, and its standalone prospects.”

According to estimates by AB InBev, the combined entity would generate revenues of US$64 billion (SG$90.3 billion) and an EBITDA of US$24 billion, and boast of operations in virtually every major beer market, especially emerging ones with strong growth potential – such as Africa, Asia and Central and South America.

“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, said Jan du Plessis, Chairman of SABMiller. “AB InBev is very substantially undervaluing SABMiller.”

Shares in SABMiller plc (LON:SAB) closed 2.3 per cent higher Wednesday at GBP 3,708.36, while those of Anheuser Busch Inbev SA (EBR:ABI) were up 0.6 per cent at 98.65 euros.

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