SABMiller rejects 'informal' offer from AB InBev as too low: Bloomberg

Tue Oct 6, 2015 2:02pm EDT
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By Martinne Geller

LONDON (Reuters) - Brewer SABMiller has rejected an "informal" takeover offer from Anheuser-Busch InBev of about $100 billion as being too low, a media report said on Tuesday, pushing down its share price.

The proposal made last week was worth slightly over 40 pounds per share, according to Bloomberg, which cited sources familiar with the matter. SABMiller executives and some shareholders regarded a price closer to 45 pounds as representing fair value, it added.

SABMiller and AB InBev both declined to comment on the report, cited by traders as the reason behind a drop in SABMiller shares, which were down 3.2 percent at 36.4 pounds at 1236 GMT. As of Monday's close, the shares had been up 25 percent since AB InBev's takeover approach was revealed on Sept. 16.

A source familiar with the matter told Reuters that discussions were ongoing and there was talk of both sides possibly asking for an extension of the Oct. 14 deadline for a formal bid, given the complexity of such a deal.

UK-based SABMiller, the world's No. 2 brewer, makes beers including Peroni and Grolsch, while Belgium-based market leader AB InBev's products include Budweiser, Stella Artois and Corona.

Morningstar analyst Phil Gorham estimated that with $1 billion in cost-savings following a takeover, AB InBev should still be able to make the deal work at 40 pounds per share. With $2 billion of savings, it should be able to go to 44 pounds.

"It makes sense to start at 40 and go to mid-40s," Gorham said.

At 40 pounds per share, a takeover of the world's No. 2 brewer would cost nearly 65 billion pounds ($98.6 billion). At 45 pounds it would be close to 73 billion pounds ($110.7 billion).   Continued...

A barman pours a beer produced by brewing company SAB Miller at a bar in Cape Town, September 16, 2015.  REUTERS/Mike Hutchings