SABMiller board agrees to AB InBev's GBP44 per share offer

The FTSE 100 brewer announced the deal on Tuesday.

Under the terms of the potential offer, SABMiller shareholders would receive £44 per share.

The board of SABMiller has indicated to AB InBev it would be prepared to recommend the all-cash offer to shareholders.

There is also a partial share offer for approximately 41% of the SABMiller shares of 0.48 unlisted shares and £3.7788 per SABMiller share.

A condition of the deal is that the company’s two major investors Altria Group and BevCo would elect for the partial share alternative in respect of all of their SABMiller shares.

“Judging by the wording of the press release, ABI appears to have offered board representation to both Altria and the Santo Domingo family,” Societe Generale noted. “This was not part of the earlier offers.”

But Societe Generale also noted that investors may have to wait a while to receive their share of the offer.

"The deal is subject to anti-trust and regulatory approvals, a process that we believe could take up to 12 months; if so completion (and investors receiving cash) is still some way off."

AB InBev has also agreed to a US$3bn reverse break fee to SABMiller if the deal falls through due to any failure to obtain regulatory clearances or the approval of AB InBev shareholders.

SABMiller has extended the offer deadline, with a formal offer needing to be submitted by 5pm on 28 October.

Cavendish Corporate Finance’s Jonathan Buxton said the bid marks a firm step towards the biggest deal of the year.

“Tempted back into negotiations by Monday’s £43.5 bid, SAB Miller shareholders have tried to maximise this opportunity as the strategic rationale behind the deal is compelling enough to have kept AB InBev at the table throughout a protracted bidding process.

However Buxton said the company’s share price still indicates uncertainty that the deal will go through.

“This may have more to do with regulatory than shareholder approval as with the cash offer now raised again, investors may be swayed by a 50% premium that would not have been feasible before the equities sell-off of the last few months.”

It’s the fifth offer the European brewing giant has made to SABMiller.

Earlier offers of £38 and £40 per share were unanimously rejected by the company.

On 7 October, the company also rejected a £42.15 offer from AB InBev, saying it “substantially undervalues SABMiller, its unique and unmatched footprint, and its standalone prospects”.

On Monday, the Belgian brewer tabled an improved offer of £43.50 per share.