AB InBev Says SABMiller Board's Opposition Lacks Credibility

  • SABMiller shareholders should speak up, AB InBev's Brito says
  • Deal is `long time coming' but tough to sign, investor says

Anheuser-Busch InBev NV turned up the heat on SABMiller Plc after three takeover proposals failed to get talks going, saying the board’s opposition lacks credibility and shareholders are being offered a price the brewer alone won’t achieve any time soon.

SABMiller’s rejection isn’t credible because the price of 42.15 pounds a share in cash that most stockholders would receive is 44 percent above where SABMiller was trading before speculation of a deal, Leuven, Belgium-based AB InBev said in a statement Thursday. Also, Altria Group Inc., SABMiller’s largest shareholder, has urged talks over the 65.2 billion-pound ($99.7 billion) potential offer, AB InBev said.

AB InBev is trying to rally support from SABMiller shareholders for the plan, which would combine the world’s two biggest brewers in one of the biggest acquisitions ever. A spokesman for SABMiller declined to comment on AB InBev’s statement. SABMiller on Wednesday rejected the approach, saying it “substantially undervalues” the company.

“The board of SABMiller has refused to meaningfully engage with us,” AB InBev Chief Executive Officer Carlos Brito said in the statement. “If shareholders agree that we should be in proper discussions, they should voice their views and should not allow the board of SABMiller to frustrate this process and let this opportunity slip away.”

AB InBev also disputed SABMiller’s contention that antitrust authorities might block the deal. The target said Wednesday when AB InBev first publicly announced the details of a potential bid that the buyer “has not yet provided comfort” to SABMiller that it can get the deal past regulatory hurdles in the U.S. and China.

“Together with its advisers, AB InBev has done significant work on regulatory matters and has identified solutions that provide a clear path to closing,” the Belgian brewer said. “AB InBev has repeatedly offered to share this analysis with SABMiller and its advisers. Each time the board of SABMiller has refused to engage.”

‘Tough Deal’

SABMiller fell 0.3 percent to 36.22 pence at 12:05 p.m. in London. AB InBev dropped 0.6 percent to 98.03 euros.

“How long will it be before shareholders see a value over 42 pounds in the absence of an offer from AB InBev?” Brito also said.

John Maxwell, the manager of the Ivy International Core Equity Fund in Kansas City, said Wednesday there’s a chance of a sweetened offer, though there’s also a risk the deal falls apart.

“We’re in SAB largely because we thought there was a chance that this could happen,” Maxwell said in a phone interview. “It’s a deal that’s been a long time coming, but I think it’s a tough deal to get signed.”

AB InBev doesn’t have “tremendous room” to raise the price, because the cost savings from this purchase won’t be as big as in the brewer’s past acquisitions, he said.

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