Photographer: Daniel Acker/Bloomberg

AB InBev, SABMiller Race to End as Takeover Rules Force Hand

  • Takeover Panel told SABMiller to make statement as stock rose
  • Companies now have 28 days to announce a formal offer

The world’s largest brewer wanted to keep the biggest deal of the year under wraps. Market chatter and the U.K.’s unique takeover rules got in the way.

The Takeover Panel forced SABMiller Plc to release a statement about an approach from larger rival Anheuser-Busch InBev NV after speculation on Tuesday sent London-based SABMiller’s shares up as much as 4.1 percent, according to two people with knowledge of the matter, who asked not to be identified because the information is private.

The disclosure triggers a 28-day timeline for a formal, fully financed bid. Known as the put-up-or-shut-up rule, if AB InBev decides to walk away from the transaction it can’t come back for six months.

Stringent rules on disclosure require a company to confirm or deny any hint of a deal, whether that comes from an anonymously sourced news article or unusual stock movement. The Takeover Panel, the world’s oldest acquisition oversight body, introduced the rules in 2011, affecting deals by companies including Pfizer Inc. and Glencore Plc.

“Media attention following disclosure of deal negotiations can be disruptive to the companies, and can kill an otherwise valuable deal” said John Coates, professor of law and economics at Harvard University.

Of the $1 trillion in acquisitions of U.K. companies announced since September 2011, when the new rules came into effect, $166 billion have been terminated or withdrawn, according to data compiled by Bloomberg.

Terminated deals last year included Pfizer’s rejected $125 billion bid for AstraZeneca Plc, and Carillion Plc’s spurned attempts to merge with Balfour Beatty Plc, which would have created a company with a combined market value of over 3 billion pounds ($4.6 billion) at the time.

Refuse Comment

The U.K.’s rules are more stringent than in the U.S., where companies aren’t subject to disclosure requirements and can simply refuse to comment on speculation or stock moves.

“Bidders are reluctant to start a process because of the rules,” said Coates.

That was not the case with AB InBev and its long-awaited pursuit of SABMiller. AB InBev Chairman Olivier Goudet contacted his counterpart at the smaller brewer, Jan du Plessis, this week to propose discussions on a potential deal, people familiar with the matter said on Wednesday.

No proposal has yet been received and there can be no certainty that an offer will be made, SABMiller said in a statement. ABI InBev now has till 5 p.m. on Oct. 14 to make an offer or announce it doesn’t intend to proceed. SABMiller may also ask the panel for an extension.

AB InBev chose to avoid expanding its circle of advisers beyond Lazard to reduce the possibility of leaks, a person familiar with the situation said.

As it now fronts queries from a slew of global financiers and advisers keen to get involved in what could be the mega deal of the year, the Belgian brewer will be keeping its eyes on the clock. The Takeover Panel will have one hand firmly on the stopwatch.

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