London — The biggest brewer in the world, Anheuser-Busch InBev raised the price it has offered to pay for its rival SABMiller on Tuesday.
The world’s biggest beer company, Anheuser-Busch InBev, bid $107 billion to buy the world’s second-biggest beer company, SABMiller. Last week, the federal government approved the proposal reached after months of negotiations. Merged, the two companies will account for about the 30 percent of all global beer sales. Anheuser-Busch would get benefitted since the brewery will have greater dominance in Latin America and substantial operations in Africa. However, the Brexit elections generated uncertainty about the value of the pound against the dollar and the euro.
Anheuser-Busch announced on July 26 that it would now pay 45 pounds ($59) a share in cash for SABMiller, which is an increase of 1 pound from its prior offer.
That would value SABMiller at £79 billion
Anheuser-Busch also claimed that the offer was final and that the company will “not further the cash element or increase the cash consideration or the exchange ratio of the partial share alternative,” according to the Financial Times.
Anheuser-Busch had made the offer of a partial share, with the idea of winning the support of American tobacco company Altria and the Santo Domingo family of Colombia, which are SABMiller’s two largest shareholders.
The partial share would allow them to avoid a huge tax bill from the sale of their holdings. However, after the Brexit elections some investors were worried about a potential increase in the value of the share alternative as the pound has fallen sharply.
— Anheuser-Busch (@AnheuserBusch) July 21, 2016
As of 25 July’s close, the partial share alternative was worth £51.14 a share but that did not account for the lockup period of five years or “any discount for the unlisted nature of the restricted shares”. Shares of SABMiller closed at £44.40 in London on Monday.
In the other hand, SABMiller claimed it was considering the revised offer and confirmed the reunion between the chairmen of the two giants, with the idea of discussing ‘recent exchange rate volatility’ and other market movements.
However, a SABMiller shareholder, Aberdeen Asset Management, released a statement on Tuesday, claiming the revised deal was unacceptable because it undervalued the company, favoring Altria and Santo Domingo family of Colombia.
“We have engaged with SABMiller’s board on the differential treatment of shareholders since the deal was first constructed,” Aberdeen said. “The way that the value of the partial share offer has diverged from the cash offer has compounded our discomfort.”
Anheuser-Busch has entered into several agreements to sell assets from the merged company in order to calm regulators about the deal.
The company has already received blessings in the European Union, the United States and South Africa for the bid and is awaiting approval in China.
— Bud Light (@budlight) June 27, 2016
How will this deal affect beer lovers?
According to Time, beer insiders have stated that the merging of the two giants will impact the small companies.
There could be fewer locally-owned breweries, and therefore fewer consumer choices, which derive on fewer imports, less innovation, and fewer craft brews.
The good thing for all beer lovers in that it won’t happen overnight and, at least for the next couple of years, there won’t be a significant impact.
Several representatives of small and independent brewers have stated the U.S. Justice Department’s approval of the deal looks good since it imposes a series of conditions designed to prevent the mega-beer company of distorting the U.S. market.
Source: The New York Times