Peroni brewer SAB Miller agrees to $100bn takeover bid

The brewing industry took another step on the path to consolidation today with the news that SAB Miller had agreed to a $100bn (about £70bn) takeover by the world’s biggest brewing brewer, Budweiser and Stella owner AB InBev.

London-based SAB Miller, maker of Peroni and Miller, agreed to the key terms of the latest offer from AB Inbev to take control of its shares for £44 each, meaning a deal worth roughly £70 billion.

In a statement, SABMiller’s board said that it would be prepared to unanimously recommend the offer to its shareholders.

A tie up between the two largest brewers in the world would create a company with revenues of US$64 billion (£42bn) per year, AB Inbev estimates.

The agreement comes after pressure began mounting on the SABMiller board when its largest shareholder, Altria Group, publicly disagreed with its position on previous offers – the board had already turned down offers of £38, £40, £42.15, and £43.50 per share, claiming they “very substantially undervalued” the company.

The two boards have now agreed to proceed with formulating a concrete deal by seeking regulatory clearances and shareholder approval. According to reports, AB Inbev would be subject to a £2bn break fee, payable to SABMiller, if it fails to obtain these approvals.

The all-cash offer, partly funded by third-party debt, represents a premium of approximately 50% to SABMiller’s closing share price of £29.34 per share on 14 September 2015 – the last trading day before the negotiations were made public.

The new giant would account for 29% of the 200 billion litre global beer volumes, more than three times bigger than its nearest rival, Heineken. It is thought that it the deal will have little impact on the consumer, as SAB Miller and AB InBev are already by far the largest brewers in the industry.

 

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