InBev Said to Line Up BofA, Santander on SABMiller Financing

Why Does InBev Want to Take Over SABMiller?
  • Deutsche Bank, BNP Paribas, SocGen also submitted proposals
  • ABI, SAB have had informal contact since plan was disclosed

Anheuser-Busch InBev NV is lining up banks including Bank of America Corp. and Banco Santander SA to arrange as much as $70 billion in financing as it prepares to make a takeover proposal for SABMiller Plc, according to people familiar with the matter.

Deutsche Bank AG, BNP Paribas SA and Societe Generale SA have also submitted financing proposals to the world’s biggest brewer, said the people, asking not to be named as the matter is private. AB InBev is working with about 10 banks to arrange total financing of $50 billion to $70 billion, they said. Talks are ongoing and the timing of any offer will depend on finalizing the funding package, they said.

Since AB InBev’s intention to pursue a takeover of SABMiller was disclosed on Sept. 16, there has been informal contact between the companies, two of the people said. Any deal could value the smaller, London-listed brewer at more than $100 billion, according to analysts’ estimates. AB InBev had already reached out to Altria Group Inc., SABMiller’s biggest shareholder, before it announced plans to make an approach for its rival, people with knowledge of the matter said on Sept. 18.

SABMiller shares rose as much as 6.9 percent in London and closed 4.9 percent higher at 3,814 pence. AB InBev pared losses to close down 2.8 percent at 93.55 euros.

Brewing Consolidation

The acquisition of SABMiller would be the biggest in the industry’s history and cap more than a decade of consolidation across brewing companies. AB InBev may pay more than 4,200 pence for each share of SABMiller, according to data compiled by Bloomberg based on the average estimate of five analysts. That would value SABMiller at about 68 billion pounds ($103 billion).

SABMiller is signaling it may consider an offer of about 4,300 pence to 4,500 pence per share, two of the people said, adding that the valuation is still being discussed and will also depend on the structure of the offer.

The beer maker would probably raise about $60 billion of debt to finance the acquisition, Owen Murfin, a London-based portfolio manager on BlackRock Inc.’s global bond team, said last week. That would be a record bond offering, exceeding the $49 billion that Verizon Communications Inc. raised two years ago to fund its buyout of Vodafone Group Plc’s stake in a wireless venture.

Under the U.K. Takeover Panel rules, AB InBev 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.

Spokesmen for AB InBev and SABMiller declined to comment. Representatives for BofA, BNP Paribas, Deutsche Bank, Santander and SocGen also declined to comment.

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