The key terms of the proposal from AB In Bev will see SABMiller shareholders entitled to £44 per share in cash, with a partial share alternative for around 41% of SABMiller shares.
AB InBev has put forward several proposals to acquire SABMiller. Today's offer of £44 per share in cash is up on yesterday’s proposal of £43.50 per share, and follows last week’s rejected offers of £38, £40 and £42.15 per share.
The offer of £44 per share is around 50% up on SABMiller’s share price before renewed speculation on a possible takeover began (£29.34 on September 14).
The UK’s takeover deadline has been extended to allow both parties to continue talks and formalise an agreement. The deadline, which had been set for tomorrow, has been extended to 5pm on 28 October. By this time, AB InBev needs to make a firm offer, or state it does not intend to make an offer.
Analyst Phil Carroll, of Shore Capital, said: "All in all it looks like a deal is now pretty close and although many hurdles remain on the way to getting to a completed deal, we expect AB InBev’s proposal to now become firm in due course with a recommendation from SAB Miller’s board."
The new mega-brewer would control around 30% of global beer volumes: making what AB InBev terms ‘the first truly global beer company.’
It is expected to generate revenues of $64bn and EBITDA $24bn.
A statement from the two companies, issued this morning, said: “The Board of SABMiller has indicated to AB InBev that it would be prepared unanimously to recommend the all-cash offer of £44 per SABMiller share to SABMiller shareholders, subject to their fiduciary duties and satisfactory resolution of the other terms and conditions of the Possible Offer.”
Regulatory issues will pose a significant challenge in the creation of the mega-brewer. AB InBev says it will put forward a ‘best efforts’ commitment to get the clearances required to close the transaction.
It has also agreed to pay $3bn to SABMiller if it fails to get clearance from regulators, or approval of its shareholders, and the transaction fails to close as a result.
AB InBev’s portfolio of brands includes Budweiser, Stella Artois, Corona, Beck’s, Leffe, Hoegaarden and Skol.
SABMiller, the beer and soft drink business headquartered in London, owns brands including Peroni, Grolsch and Foster’s.
The combined mega-brewer would own 18 of the world’s 40 most popular beer brands (by volume).
In setting out AB InBev’s plans last week, Carlos Brito, CEO, said that the footprints of the two companies are ‘largely complementary.’ Most importantly, a combined force would have strong growth prospects in Africa, a key emerging region, as well as Asia, Central and Latin America.
SABMiller has a number of brands in Africa, while AB InBev's brands are focused in North and South America and Europe.