LONDON—Brewer Anheuser-Busch InBev has increased its cash offer for SABMiller to 45 pounds (US$58.98) per share after pressure from investors who had seen the value of the bid drop as the pound declined following Britain’s vote to leave the European Union.
The maker of Budweiser increased the offer by one pound a share, valuing the total transaction at 79 billion pounds.
SABMiller had accepted, in principle, a takeover bid in a deal that seeks strength in size—the world’s two largest brewing companies would together control nearly a third of the global market.
But the pound has plunged by more than 10 per cent since the June 23 referendum calling for a British exit from the EU. That has reduced the value of the all-cash offer, which most SABMiller shareholders were considering.
Investor Aberdeen Asset Management on July 26 made plain its unhappiness with both the new offer and the overall situation.
“The revised deal remains unacceptable,” the company said in a statement.
It claimed it undervalued the company and favours SABMiller’s two major shareholders, which had arranged to get cash and stock, instead of only cash. U.S. tobacco company Altria and BevCo, the investment vehicle for the Santo Domingo brewing family, own about 40 per cent of SABMiller and had been offered a part of the deal in shares to encourage them to accept because they wanted to remain in beer as shareholders of the new company.
The drop in the pound has caused the value of the all-cash deal to fall more than the cash-and-stock deal. That has raised a sense of injustice among some of SABMiller’s shareholders.
Aberdeen Asset Management said that it had engaged with SABMiller’s board on the “differential” treatment of shareholders and that the way that the “value of the partial share offer has diverged from the cash offer has compounded our discomfort.”
“Altria and BevCo should not be able to vote on the cash offer as they are inherently conflicted by their future stakes in AB InBev if the deal completes,” Aberdeen said. “We believe the board’s only choice is to treat Altria and BevCo as a separate class of shareholders and would urge them to make a public statement to this effect.”
It indicated it was willing to even give up on the deal: “in the absence of an improved offer we would be more than happy to remain committed long-term shareholders in SABMiller.”
SABMiller said in a statement that its chairman, Jan du Plessis, and his counterpart at AB InBev spoke last week about the exchange rate volatility and market movements, but that there had been no “discussion or agreement” about the revised offer.
The SABMiller board confirmed it hired Centerview Partners to provide additional financial advice.
“The board will continue to consult with shareholders and will meet in due course formally to review, having regard to all facts and circumstances, the Revised Offer and a further announcement will be made thereafter,” SABMiller said in a statement.
The Financial Times wrote last week that U.S. hedge fund Elliott Management had written to the SABMiller board to express concern.