SABMiller shareholders voted overwhelmingly in favour of the £79bn offer from Anheuser-Busch InBev, paving the way for the Belgian brewer to clinch the third-largest merger in corporate history after a year-long pursuit.
Wednesday’s vote, held at a hotel in London’s Park Lane near SAB’s Mayfair headquarters, resulted in 95.5 per cent of SAB shareholders accepting the larger brewer’s £45-a-share cash offer and approving the UK’s biggest corporate deal.
Megabrew, as the merger has been dubbed, combines the world’s two largest brewers in an industry that has heavily consolidated over the past decade and faces challenges from the growth of craft beer.
The takeover will result in AB InBev, whose brands include Budweiser, Stella Artois, Beck’s and Corona, selling one in four beers around the world and reaping 45 per cent of the industry’s profits.
It will also mark the end of the former South African Breweries’ 120-year history as an independent company, instead giving AB InBev coveted access to fast-growing beer markets in Africa, where it barely has a presence and in those parts of Latin America where it was not already dominant.
In Brussels, where AB InBev shareholders also endorsed the deal, the brewer announced that the enlarged group’s name would remain AB InBev, with no incorporation of the SABMiller moniker.
That provoked some disappointment at the already subdued London gathering. But Jan du Plessis, SAB chairman who helped bid up AB InBev’s price, said: “AB InBev are paying a full price for the company; they can do with the company what they wish, they can call it what they wish; that’s the way life works and that’s fine. That’s the way it is.”
The acquisition is the most ambitious in a series of audacious takeovers spearheaded by Jorge Paulo Lemann, the Brazilian billionaire who is AB InBev’s single largest individual shareholder.
SAB’s two largest investors — Altria, the US tobacco company and BevCo, the family investment vehicle of Colombia’s Santo Domingo family — were excluded from the vote, following a UK High Court ruling last month to treat them as a separate class of shareholder.
Instead, Altria and BevCo, which own a combined 41 per cent of SAB, formalised in a separate vote their acceptance of AB InBev’s partial share alternative of 0.483969 in AB InBev shares and £4.66 in cash for each SAB share.
The UK court decision followed growing investor criticism about the influence of the two biggest shareholders and the deal’s structure of two offers. The partial share offer, aimed at the two largest shareholders, ended up being more favourable than the cash offer because of the drop in the value of the pound after the UK’s Brexit vote.
That pressure led to AB InBev raising its cash offer in July.
Aberdeen Asset Management, which holds 1 per cent of SAB and voted against the takeover, said it was disappointed at the outcome but hoped its lobbying “helped to secure a better deal for our clients, albeit the final price still significantly undervalued SABMiller in our view”.
Although the cash-and-share offer was open to all shareholders, the five-year lock-up period made it unattractive to almost all but the two largest investors for whom the structure is tax-friendly.
Anna Ward, analyst at Euromonitor International, said that despite AB InBev’s global spread after the deal, it would still have to grapple with changing consumer tastes and the rise of craft beer in mature markets.
“Considering the ever-growing consumer preference for small-scale local beers, creating such an industry behemoth seems arguably counter-intuitive,” she said. “Nevertheless, in light of the slowdown in key markets such as Brazil, extending the reach of its flagship global brands will undoubtedly remain a priority for AB InBev.”
AB InBev has lined up $16.5bn in disposals of SAB assets, including Peroni and Grolsch in Europe, Miller Lite in the US and Snow in China to secure approval from antitrust regulators in more than 20 countries. The biggest remaining SAB brands are Castle Lager, Victoria Bitter and Aguila, reflecting the brewer’s more diversified and decentralised culture compared with that of AB InBev.
(Published by Financial Times - September 28, 2016)