SABMiller board to weigh AB InBev takeover terms as shareholder meeting looms: source

Wed Jul 20, 2016 8:33am EDT
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LONDON (Reuters) - SABMiller SAB.L has not ruled out asking Anheuser-Busch InBev (ABI.BR: Quote) to revamp its proposed $100 billion-plus takeover offer before formally recommending the bid, a source close to the London-listed brewer told Reuters, amid rising shareholder disquiet about the terms.

SABMiller's board is meeting on Wednesday, a day before its annual shareholder meeting, to discuss how to quell unease about the disparity between ABI's 44-pounds per share cash offer and a stock-and-cash alternative designed for SAB's biggest investors, cigarette maker Altria (MO.N: Quote) and Colombia's Santo Domingo family, the source said.

When the original deal was announced in November, that partial share alternative -- which avoids triggering large tax bills -- was worth about 39 pounds.

But the recent fall in the pound and rise in ABI's shares have increased its value to about 51 pounds, representing a premium of around 15 percent to the cash offer.

All investors have the option to take the stock and cash offer but under current terms the stock cannot be traded for five years, rendering the option highly unattractive for most fund managers.

"At this stage the board will reassure investors and tell them their concerns will only be addressed after the deal gets regulatory clearance," the first source close to SAB said.

"After the pre-conditions are satisfied, (the board) will need to decide whether to refresh its recommendation for the ABI bid or ask for improved terms," the source added.

SABMiller declined to comment.

A second source close to SABMiller described the long-planned meeting as "routine" prior to an AGM and said it was unconnected to recent stakebuilding by activist investors The Children's Investment Fund Management (TCI) and Elliott Advisors.   Continued...

A glass of SABMiller's flagship brew, Castle Lager is seen at a bar in Cape Town, South Africa, November 10, 2015.  REUTERS/Mike Hutchings/File Photo