11th Nov 2015 11:52
LONDON (Alliance News) - SABMiller PLC reached an agreement on Wednesday to be acquired by bigger rival Anheuser-Busch InBev in a deal valuing the Anglo-South African brewer at around GBP71.0 billion, bringing a close to months of talks between the two on creating a company which will be by far the biggest beer business in the world.
SABMiller also said it has struck a deal to sell its stake in the MillerCoors joint venture in the US to Molson Coors Brewing Co, its partner in the company. Molson Coors will pay USD12.0 billion to acquire SABMiller's 58% stake in the business, though the deal is conditional on the combination of AB InBev and SABMiller completing.
The sale of the stake should help pave the way for regulatory approval of the takeover, though further remedies are likely to have to be offered as the combined group will control about a third of global beer volumes. In particular, it is expected the pair will have to sell some assets in China to secure regulatory passage.
The pair entered into talks in October, and SABMiller rejected a couple of bids from AB InBev before agreeing in principle to a 4,400 pence per share bid, which is where formal takeover deal has been agreed. SABMiller shares were up 2.7% to 4,084.5 pence on Wednesday, one of the best performers in the FTSE 100, as investors welcomed the offer going formal.
Importantly, the deal has secured the support of Altria Group Inc, the US cigarette giant, and BevCo Ltd, controlled by Colombia's Santo Domingo family, which together own around 41% of SABMiller. Altria has consistently been in support of the offer but BevCo had held out.
"SABMiller has an unmatched footprint in fast-growing developing markets, underpinned by our portfolio of iconic national and global brands. However, AB InBev's offer represents an attractive premium and cash return for our shareholders, and secures earlier delivery of our long-term value potential, which is why the board of SABMiller has unanimously recommended AB InBev's offer," said Jan du Plessis, SABMiller's chairman.
AB Inbev repeated its rationale for the deal once more as it made the formal takeover, saying it believes the deal will create a "truly global brewer" with operations in virtually every major beer market. It said it will strengthen its presence in key emerging markets, in particular in growth markets in Asia, central and southern America and Africa.
The group reckons it can generate pre-tax cost synergies of around USD1.4 billion per year, phased in over the course of four years. It also thinks further revenue and cash flow synergies may be achievable through the pair's combined distribution network.
"We are excited about our agreement on the terms of a recommended acquisition of SABMiller to build the world's first truly global brewer. We believe this combination will generate significant growth opportunities and create enhanced value to the benefit of all stakeholders. By pooling our resources, we would build one of the world's leading consumer products companies, benefitting from the experience, commitment and drive of our combined global talent base," said Carlos Brito, AB InBev's chief executive.
By Sam Unsted; [email protected]; @SamUAtAlliance
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