AB InBev raises final offer for SABMiller after pound declines

Anheuser-Busch InBev (AB InBev) has raised its takeover offer for sector peer SABMiller to £79bn ($103.8bn, €93.8bn), after investors expressed their concern over the proposed deal in the wake of the sterling's sharp depreciation over the past month.

The Belgium-based beer giant said in a statement on Tuesday (26 July) that SABMiller's shareholders will now be entitled to receive £45 in cash per share, or £51.14 in cash and stock.

The latest offer, which AB InBev described as "final", is £1 per share higher than the cash offer and an increase of around 88p a share on the stock alternative that the two brewing giants agreed in principle in November last year.

AB InBev's decision to present an improved offer comes after the pound's sharp decline following Britain's European Union referendum, widened the gap in value between the two offers facing SABMiller's shareholders. As of Monday, the option of a cash-only deal was 16% lower in value than the cash and stock alternative.

A number of investors in the South African brewer have made their feelings clear about the terms of the original deal, which they claimed favoured two of SABMiller's biggest shareholders.

Hedge fund managers including Elliott Management, TCI and Davidson Kempner claimed the alternative offer comprising mainly of stock — which will consist of shares in AB InBev that will not trade publicly for five years — was aimed at winning the support of US tobacco firm Altria and BevCo, the investment vehicle of the Santo Domingo brewing family.

The pair owns approximately 40% of the London-listed brewer and the cash and stock offer is understood to have been formulated in a bid to encourage both firms to back the deal, as it would minimise their tax liability from an AB InBev takeover.

On Tuesday, Aberdeen Asset Management, one of SABMiller's top 10 shareholders, insisted even a "sweetened deal" remained unacceptable as it would undervalue the company.

"In the absence of an improved offer we would be more than happy to remain committed long-term shareholders in SABMiller," the firm said in a statement.

"We have engaged with SABMiller's board on the differential treatment of shareholders since the deal was first constructed. The way that the value of the partial share offer has diverged from the cash offer has compounded our discomfort."

The asset manager added SABMiller's main two shareholders should not be allowed to vote on the cash offer, because of conflicting interest.

"Altria and Bevco should not be able to vote on the cash offer as they are inherently conflicted by their future stakes in AB InBev if the deal completes," Aberdeen said.

"We believe the board's only choice is to treat Altria and Bevco as a separate class of shareholders and would urge them to make a public statement to this effect."

The merger between AB InBev and SAB Miller, currently the world's biggest and second biggest brewer respectively, remains subject to regulatory approval and would create the biggest beer company in the world, with a market capitalisation of approximately $288bn.