SABMiller recommends revised AB InBev takeover offer

Bottles of Budweiser

Brewing giant SABMiller has recommended that its shareholders should accept the revised takeover offer from AB InBev.

Budweiser owner AB InBev raised its offer for rival SABMiller on Tuesday after a fall in the pound had made its original terms less attractive.

The pound has lost about 12% against the dollar since the UK referendum.

The deal, agreed last year, will create the world's largest beer firm, producing about 30% of the world's beer.

In another important development on Friday, the deal was given the go-ahead by Chinese regulators, a major hurdle to overcome before any deal could go ahead.


AB InBev raised its offer by £1 a share to £45 a share, valuing SABMiller at about £79bn, up from £70bn previously.

SABMiller counts Peroni, Pilsner Urquell, and Grolsch among a stable of brands, while AB InBev also produces Stella Artois, Corona, Leffe and Beck's.

Image copyright Getty Images
Image caption Peroni is one of the well-known beer brands produced by SABMiller

SABMiller chairman Jan 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.

"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."

Less attractive

The way in which the offer is structured means that investors can receive either cash, or a mixture of cash and shares in the newly-merged company - a partial share agreement (PSA) as it is known.

However, the PSA was designed specifically for SAB's two biggest shareholders Altria and Bevco, who wanted to keep a stake in the new company.

Since last November, when the merger was agreed, the cash offer has become less attractive given the weaker value of the pound.

However, Aberdeen Asset Management, an SABMiller shareholder, has again said that the deal is unacceptable.

On Friday it said that, "as we have already indicated, we intend to vote against the deal as we are uncomfortable with the structure and believe it undervalues the company".

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