British brewer SABMiller on Wednesday rejected a $103-billion takeover offer from Anheuser-Busch InBev, leaving the world’s biggest maker of beer to decide whether to return with a fourth bid.
SABMiller, brewer of Foster’s lager, said its board had “unanimously rejected” the third offer from Belgian-Brazilian firm AB InBev, insisting it “substantially undervalues” the group.
“The board, excluding the directors nominated by (biggest shareholder) Altria Group Inc., has unanimously rejected” the improved 68-billion-pound ($103-billion, 92-billion-euro) offer, the company said a statement.
SABMiller added that its statement was released “without the prior agreement or approval of AB InBev”, whose beers include Budweiser, Corona and Stella Artois.
AB InBev announced Wednesday an improved takeover offer worth 42.15 pounds per SABMiller share — a premium of about 44 percent to SABMiller’s closing share price of 29.34 pounds on September 14, prior to the first offer.
SABMiller shares were up 0.95 percent at 36.55 pounds following the rejection in London afternoon trade, coming off early gains of around three percent after the revised offer was announced. InBev was up 1.55 percent in Brussels.
AB InBev had earlier said it was disappointed that SABMiller had rejected its two previous lower-priced offers “without any meaningful engagement”.
It had yet to react to news of the third rejection.
A deal would create a global “megabrewer” worth about 220 billion euros ($250 billion).
“AB InBev is very substantially undervaluing SABMiller,” chairman Jan du Plessis said in a statement on Wednesday, describing his company as the “crown jewel of the global brewing industry”.
He said the rival beer giant “needs SABMiller but has made opportunistic and highly conditional proposals, elements of which have been deliberately designed to be unattractive to many of our shareholders”.
For its part, InBev said the deal was fair.
“AB InBev believes the revised cash proposal of 42.15 pounds per share is at a level that the board of SABMiller should recommend,” it said in a statement.
– Another raised offer? –
With the lager saga already dragging on for weeks, analysts say InBev may have to increase its offer to around 45 pounds a share to get the deal done at a time when the global players are looking to consolidate.
The big brewers are looking for tie-ups to offset the inroads made by small independent brewers catering to local demand for craft beers and other less brand-heavy products.
SABMiller shareholders rejected two previous offers at 38 pounds and then 40 pounds and analysts said they may well do the same again.
The British brewer recalled when InBev had discussed offering 42 pounds in talks last month, the board had concluded that it was too low, noting that the new proposal was only 15 pence higher.
“We should not be surprised to see a slightly raised offer over the next week,” Simon Davies of Canaccord Genuity in London said in a note.
– ‘Decade of consolidation’ –
Jeremy Cunnington at Euromonitor International added: “AB InBev’s bid for SABMiller is the inevitable conclusion of over a decade of consolidation within the brewing industry.
“The completed deal will give AB InBev a 29 percent market share, which is a 20 percentage point lead over the next biggest brewer, Heineken,” he said.
Heineken said last month it was buying half of Lagunitas, the fifth-largest craft brewer in the United States.
And on Wednesday the Dutch beer giant announced a deal worth 696 million euros ($780 million) with the world’s biggest distiller, Diageo, to get a majority stake in Jamaica’s Red Stripe brewer and Malaysia’s GAB, maker of such brands as Tiger and Anchor.
AB InBev was formed in 2008 by the merger of InBev and US brewing giant Anheuser-Busch.
The group said in its earlier statement that it was disappointed that SABMiller had rejected its two previous offers “without any meaningful engagement”.
“We have the highest respect for SABMiller, its employees and its leadership, and believe that a combination of our two great companies would build the first truly global beer company,” InBev chief executive Carlos Brito said.
Together, they would cover “virtually every major beer market”, it said, including the emerging markets of Africa, Asia and Latin America.