SABMiller board likes AB InBev's sweetened offer
The MegaBrew deal is set to be tapped.
The board of London-based SABMiller announced Friday that it will recommend shareholders accept Anheuser-Busch InBev's improved offer to acquire the No. 2 global brewer.
Earlier in the day, the two companies cleared the last large international hurdle in the $105 billion deal when Chinese regulators approved the merger, contingent on AB InBev's plan to sell SABMiller’s stake in China’s Snow Breweries to the state-backed China Resources Beer for $1.6 billion.
Those actions come three days after AB InBev increased its offer from 44 pounds (about $58) per share to 45 pounds (about $60) after shareholders voiced concern about the changing value of the deal with the British pound declining since the Brexit vote.
The SABMiller board said that the 79 billion-pound ($104.9 billion) offer was at "the lower end of the range of values considered recommendable," said SABMiller Chairman Jan du Plessis in a statement. "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."
Now all that remains is a shareholder vote. For that, the board said it would recommend that SABMiller's two biggest shareholders, Altria and BevCo, be treated as a separate class of shareholders.
Shares of AB InBev (BUD) rose 2.8% to close at $129.44 Friday. SABMiller (SBMRY) shares rose 2% to close at $58.69.
Also up: shares of Molson Coors (TAP), which rose 4.5% to $102.15. As part of the MegaBrew merger, Molson Coors will pay $12 billion to acquire AB InBev's 58% stake in MillerCoors and market No. 2 seller Coors Light, as well as Miller Light, the No. 4-selling beer, in the U.S., and will have the rights to the Miller brand outside the U.S.
AB InBev, the world's largest brewer, will see its share of the global market grow from 21% to 29%, by volume, says Caroline Levy, managing director, U.S. equity research for independent brokerage and investment group CLSA.
"(The deal) looks likely to go through," Levy said, despite a lack of support from fund manager Aberdeen Asset Management Group, which owns about 1.2% of SABMiller shares.
The deal could actually cost AB as much as $111 billion when currency hedges are taken into account, she said.