SABMiller declares new savings goal in defense against AB InBev

Fri Oct 9, 2015 2:19pm EDT
 
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By Martinne Geller

LONDON (Reuters) - Brewer SABMiller Plc SAB.L announced an expanded cost-cutting plan on Friday, stepping up its defense against an unsolicited $100 billion takeover offer from bigger rival Anheuser-Busch InBev (ABI.BR: Quote).

The 30-page presentation posted on the website of the world's second-largest brewer was seen as an attempt to prise a higher price out of AB InBev two days after it rejected its proposed main cash offer of 42.15 pounds a share.

"SAB's move now puts the ball firmly back into AB InBev's court," analysts at Barclays said.

On a day the heads of both companies were meeting with SAB shareholders, SAB said it now expects to reach annualized cost savings of at least $1.05 billion by 2020. The prior target for its savings program, announced in May 2014, was $500 million by 2018.

"They want a higher price and they're arguing for it," said Berenberg analyst Javier Gonzalez Lastra. "It doesn't change much. I think most people think ABI could realise synergies of $2 billion or more," he said.

Later on Friday two major institutional shareholders issued statements supporting SABMiller's stance.

Poland's Kulczyk Investments, which has a 3 percent stake in SABMiller, said AB InBev's proposal "does not reflect SABM's standalone growth potential."

Aberdeen Asset Management (ADN.L: Quote), which has a 1.8 percent stake, said the offer "significantly undervalues" SABMiller.   Continued...

 
A woman carries beer produced by brewing company SAB Miller past kegs at a bar in Cape Town, September 16, 2015. REUTERS/Mike Hutchings