By Andy Young

SABMiller's board has unanimously recommended that its shareholders accept AB InBev's improved $104bn takeover offer, meaning the megabrew takeover is now likely to go ahead.

Last week proved a tumultuous one in the long-running takeover saga, with AB InBev finally giving in to some investors who wanted to see an improved offer after the falling value of the pound saw the value of the initial offer reduce.

Speculation mounted that SABMiller’s board was being put into an increasingly difficult position of either accepting a bid that valued the company at its “lower end” or pull out of the deal all together. In the end AB InBev relented and improved its offer, a move welcomed by SABMiller chairman Jan du Plessis.

In a statement du Plessis said: “The Board’s decision was difficult given changes in circumstances since the Board originally recommended £44 per share in cash last November.  At that time we were satisfied that the 50% premium to the undisturbed share price appropriately reflected the quality of the business and its long term prospects.

“Since then, various factors have affected the value of the offer, most importantly the impact of the Brexit vote on the value of Sterling and the re-rating of comparable companies.  This has made the Board’s decision more challenging, and we believe the final cash consideration of £45 per share to be at the lower end of the range of values considered recommendable.

“It is a huge credit to chief executive Alan Clark and his management team’s leadership and professionalism that they have not allowed the distraction of the deal over the past eight months to affect performance. They have continued to produce impressive results and further enhanced the value of the business.

“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, including the recently appointed Centerview Partners.

“We are cognisant that the PSA initially stood at a discount to the Cash Consideration, but recent events have resulted in it now standing at a headline premium, before any illiquidity discount.  Amongst other reasons, that is why we intend to ask the UK Court to treat Altria and BEVCO as a separate class of shareholders.

“Now that the regulatory pre-conditions are satisfied, the Board and management will continue to work constructively with AB InBev to bring about successful completion of the transaction as soon as practicable”.

Friday also saw China give its regulatory approval to the deal, removing the last major obstacle and with the improved offer now in place, it is expected the merger will now go ahead.

The Shout Team

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

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