After investor protests about the value of the offer given the post-Brexit plunge in the pound, AB InBev this week issued a “final” offer raising the cash portion from £44 per share to £45 per share and moving the partial share offer up to £51.14.
Major investor Aberdeen Asset Management said the new deal was “unacceptable” because of the differential in value of the cash offer and the partial share offer being taken up by SAB’s biggest shareholders Altria and the Santo Domingos family.
However, SAB’s board today said it “intends to recommend unanimously the cash consideration and that SABMiller shareholders vote in favour of the UK scheme at the UK scheme court meeting”.
One potential obstacle to the deal’s approval is that SAB that it intends to propose that Altria and Santo Domingos family are treated as a separate class of shareholders, meaning that other SABMiller shareholders can vote on the revised offer separately.
The pair currently control around 41% of SABMiller stock.
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. 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.”
“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”.
AB InBev responded with a statement saying: ”AB InBev and SABMiller have worked very closely since November last year. The teams have made significant progress on the regulatory process around the world, the disposals in the US, China and Europe, as well as general integration planning and AB InBev’s bond financing program.”
“AB InBev believes that the proposed combination represents a compelling opportunity for all SABMiller and AB InBev shareholders and continues to intend to recommend the combination to its shareholders.”
“AB InBev continues to focus on working closely with SABMiller to take the necessary steps in preparation for completing the combination as quickly as practicable and expects the transaction to complete in 2016.”
Separately today the deal received clearance in China, overcoming its final significant regulatory obstacle to the mega-merger.
As part of the deal AB InBev has agreed to sell SAB’s 49% stake in CR Snow and the Snow brand to China Resources Beer Holdings for $1.6bn.