28th Oct 2015 13:53
LONDON (Alliance News) - Anheuser-Busch InBev NV on Wednesday was given another week to table its formal offer to merger with rival SABMiller PLC, as it said financing to back the deal is now in place and can be accessed at "short notice".
Belgium-based AB InBev has offered 4,400 pence per share for Anglo-South African rival SABMiller, valuing the company at GBP71.28 billion. If the deal goes ahead, it will be one of the largest merger and acquisitions of all time and will create a company with a market capitalisation of around USD280.0 billion.
AB InBev and SABMiller currently are the world's first and second largest brewers in the world, respectively. SABMiller owns a number of major beer brands, including Grolsch, Peroni, Miller and Coors, but AB InBev has more than 200 brands in its portfolio, including Corona, Stella Artois and Beck's, along with the Budweiser range.
SABMiller and AB InBev published identical statements Wednesday saying the deadline for AB InBev to make a formal offer has been extended to November 4, having been due to expire on Wednesday.
Importantly, AB InBev confirmed the financing facilities it will need to finance the cash portion of the takeover offer have been negotiated and "can be executed at short notice". On Tuesday, a report in the Financial Times, citing people briefed on the matter, had indicated the delay to the deadline had been prompted by the complexity of the financing AB InBev would have to secure to back the deal.
Given the size of the merger, arranging the financing is likely to prove complicated. Sources told the FT that AB InBev was working with 21 different banks to raise the money it needs.
AB InBev also said Wednesday it has now completed due diligence on SABMiller and had found nothing to shake its confidence in the valuation on the table or any other terms of the deal.
Any deal agreed between the two beer giants will almost certainly be subject to some strict regulatory scrutiny. According to Euromonitor, seven of the top-ten beer brands by market share are owned by SABMiller and AB InBev. Chinese brand Snow, the world's biggest selling beer, is owned by a joint venture of SABMiller and China Resource Enterprises, while Bud Light and Budweiser, both owned by AB InBev, and Skol, owned by SABMiller, all feature in the top five.
AB InBev and SABMiller control a combined 30.5% of the global market. The merger of the two will create a business with a market share more than three times that of the third-placed company, Dutch brewer Heineken Holdings NV, before any regulator-mandated divestments were made.
Last year, Heineken itself rejected a takeover approach from SABMiller, a deal which Bloomberg, citing sources close to the matter, said it was pursuing in order to give it sufficient scale to be able to see off any potential bid interest from AB InBev.
AB InBev, making its offer, acknowledged those potential regulatory hurdles and said the pair would likely have to offer remedies to competition authorities to get the deal passed in the US, China and South Africa.
A report by the Financial Times on Wednesday suggested the pair are already eyeing the sale of SABMiller's stake in the MillerCoors joint venture in the US, which it owns alongside US brewer Molson Coors. The 58% stake in the business could fetch up to USD10.00 billion, the FT said, citing people briefed on the matter.
Shares in SABMiller were up 0.9% to 3,953.00 pence on Wednesday.
By Sam Unsted; [email protected]; @SamUAtAlliance
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