By Andy Young

The world's biggest beer brewer AB InBev has expressed its "surprise" at the board of SABMiller for rejecting its latest takeover offer.

Earlier this week AB InBev made its third offer to SABMiller, at GBP 42.15 per share. While that price represents a 44 per cent increase on the price of SABMiller's share when takeover rumours started last month, the board of SABMiller said the offer "still very substantially undervalues SABMiller".

In statement AB InBev said that it is surprise by the rejection, adding that it "lacks credibility".

AB InBev said: "The cash proposal represents a premium of approximately 44 per cent to SABMiller’s closing share price of GBP 29.34 on 14th September 2015 (being the last business day prior to renewed speculation of an approach from AB InBev).

"Altria Group, Inc., which owns 27 per cent of SABMiller and has three representatives on the Board, has publicly stated that it supports our proposal and 'urges SABMiller’s board to engage promptly and constructively with AB InBev to agree on the terms of a recommended offer'."

The company added: "The Board of SABMiller has also referred to the highly conditional nature of the proposals, including significant regulatory hurdles in the US and China, 'on which AB InBev has not yet provided comfort to SABMiller'. Together with its advisers, AB InBev has done significant work on regulatory matters and has identified solutions that provide a clear path to closing. AB InBev intends to work proactively with regulators to resolve any concerns. AB InBev has repeatedly offered to share this analysis with SABMiller and its advisers. Each time the Board of SABMiller has refused to engage."

Carlos Brito, the CEO of AB InBev, said: "Notwithstanding our good faith efforts, the Board of SABMiller has refused to meaningfully engage with us. Our proposal creates significant value for everybody. How long will it be before shareholders see a value of over GBP 42 in the absence of an offer from AB InBev? If shareholders agree that we should be in proper discussions, they should voice their views and should not allow the Board of SABMiller to frustrate this process and let this opportunity slip away."

Jan du Plessis, chairman of SABMiller, added: “SABMiller is the crown jewel of the global brewing industry, uniquely positioned to continue to generate decades of standalone future volume and value growth for all SABMiller shareholders from highly attractive markets. 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. AB InBev is very substantially undervaluing SABMiller.” 

Spiros Malandrakis, Senior Alcoholic Drinks Analyst at Euromonitor International, said: "It’s a deal that has been much debated across the world, but there are two key points. One, this a deal that does make sense, in terms of geographic expansion for both companies, and of course in terms of cost savings, which are so important in this category. On the other hand, there is the danger in the era of the rise and coming of age of the craft beer revolution, and how this new mega-beer behemoth will actually deal with the danger approaching its gates – or how it will be able to acquire very experimental and innovative young brewers while not creating a backlash in their loyal client base.”

The Shout Team

The leading online news service for Australia's beer, wine, spirits and hospitality industries.

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