The Strategist

AB InBev Continues Wooing SABMiller: A New Beer Market Leader is Around the Corner

10/07/2015 - 15:03

After the British brewer SABMiller twice rejected proposals for a takeover by Anheuser-Bush InBev, the latter is once again ready to improve the conditions on the deal, bringing the ransom to $ 104 billion. In the case of the successful merger, the world will get a truly global player with a market share more than 35%.

Pudelek (Marcin Szala) via wikimedia
Pudelek (Marcin Szala) via wikimedia
The world's largest brewer Anheuser-Bush InBev prepares the third in a row bid to repurchase SABMiller. After two previous failures, AB InBev is ready to contribute already $ 104 billion, according to the company’s press release.

Under the new terms, AB InBev plans to pay £ 42,15 for each SABMiller’s share, whilst part of the transaction can be paid with AB InBev’s shares. The latter proposal concerns investors of Altria Group Inc. and BevCo Ltd, who own 41% of shares of SABMiller. In the event of the takeover, their assets could be exchanged for shares of the Belgian producer. The American cigarette maker Altria, which owns 27% of SABMiller’s capital, has issued a statement calling on the Board of Directors of the British brewery to accept AB InBev’s improved proposal.

Recall that just yesterday it became known that SABMiller rejected the second informal AB InBev’s proposal, saying £ 40 per share price is too low. The company itself has previously called the figure £ 45 per share as an essential condition for the agreement on the uptake. Thus, SABMiller expects to make about $ 110 billion out AB InBev.

The Belgian company’s perseverance is based to the fact that the merger with SABMiller would enable it to become the first and only truly global beer producer, strengthening its position in South America and Africa. The total capitalization of the merger of two major players in the market would be about $ 275 billion, and they would control more than a third of the world market. According to the research firm Plato Logic, the proportion of AB InBev global in beer market amounted to 21,1% in 2014, SABMiller’s - 15%. In the United States, the share of the combined company would be more than 75%, which can certainly cause an increased interest on the part of regulators.

SABMiller’s shares rose from £ 3,22 per share at the close of Tuesday to £ 3,72 at the opening of trading session on the London Stock Exchange on news of the third proposal. Quotes Anheuser-Bush InBev rose by about 3%, to € 101 per share, on Euronext.