AB InBev-SABMiller Deal Advances on China, Investor SupportThomas Buckley
Marshall Wace says it supports buyer’s sweetened offer
SABMiller agreed in March to sell 49% Snow stake to partner
Anheuser-Busch InBev NV’s takeover of SABMiller Plc moved closer to completion as China’s Ministry of Commerce approved the $103 billion deal and the target’s shareholders began lining up in favor of the transaction after the Budweiser maker raised its bid.
Chinese antitrust authorities gave the “Megabrew” merger its last major regulatory nod Friday after London-based SABMiller agreed in March to sell its 49 percent stake in Snow, China’s top-selling beer, to local partner China Resources Beer (Holdings) Co. The Snow deal is conditional on AB InBev buying SABMiller, and is expected to close in conjunction with that merger, according to AB InBev.
Major SABMiller shareholders have signaled they favor AB InBev’s sweetened bid as the target’s board prepares to meet to vote on whether to recommend the deal, people familiar with the process said Thursday. AB InBev on July 26 raised its cash offer by one pound a share to 45 pounds and also increased the amount of cash for shareholders who choose a cash-and-stock alternative. Marshall Wace LLP, a London-based hedge fund, said Friday it supports the new proposal. It controls more than 1 percent of SABMiller’s stock.
“I think it’s highly likely that the deal will ultimately be approved by the shareholders,” Trevor Stirling, an analyst at Sanford C. Bernstein, said by phone. “Given a report of shareholder consent, it appears likely that the board will approve the revised final offer.”
The Chinese decision is a “significant milestone” that follows approvals by regulators in the U.S., European Union and South Africa, Leuven, Belgium-based AB InBev said in a statement. All the preconditions to the deal have now been met, and the company aims to close the transaction this year, it said.
The deal was tested after SABMiller suspended integration of the two brewers following resistance from shareholders who say they haven’t been compensated enough for the pound’s recent plunge.
AB InBev gained 2.9 percent to 113.45 euros at 12:40 p.m. in Brussels, before trading in the shares was suspended at the request of the Belgian market regulator. SABMiller advanced 1.9 percent to 44.08 pounds in London.
The Belgian brewer on Friday also reported second-quarter profit growth that missed analysts’ estimates on challenging markets in South America. Earnings rose 4.3 percent to $4.01 billion on an adjusted basis before interest, taxes, depreciation and amortization, the maker of Stella Artois said. Analysts expected 6.9 percent growth. Shipments unexpectedly fell 1.7 percent.