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SABMiller’s bid rejection lacks credibility - AB InBev

Geneva  - Anheuser-Busch (AB) InBev sought to rally SABMiller [JSE:SAB] shareholders behind AB InBev’s £65.2bn (R1.4trn) takeover proposal, saying the price is higher than the London-based brewer is likely to achieve on its own.

SABMiller’s rejection of the plan “lacks credibility” because the price of £42.15 (R871.24) a share in cash that most stockholders would receive is 44% above where SABMiller was trading before speculation of a deal, Leuven, Belgium-based AB InBev said in a statement on Thursday. Also, Altria Group, SABMiller’s largest shareholder, has urged talks, AB InBev said.

“The board of SABMiller has refused to meaningfully engage with us,” AB InBev CEO Carlos Brito said in the statement.

“If shareholders agree that we should be in proper discussions, they should voice their views and should not allow the board of SABMiller to frustrate this process and let this opportunity slip away.”

A spokesperson for SABMiller declined to comment on AB InBev’s statement. SABMiller on Wednesday rejected the takeover approach, saying it “substantially undervalues” the company.

The target said on Wednesday when AB InBev first publicly announced the details of a potential bid that the potential buyer “has not yet provided comfort” to SABMiller that it can get the deal past regulatory hurdles in the US and China. AB InBev disputed that.

“Together with its advisers, AB InBev has done significant work on regulatory matters and has identified solutions that provide a clear path to closing,” the Belgian brewer said. “AB InBev has repeatedly offered to share this analysis with SABMiller and its advisers. Each time the board of SABMiller has refused to engage.”

SABMiller rose 0.2% to 36.40 pence at 11:05 in London. AB InBev dropped 1.1% to 97.57 euros.

“How long will it be before shareholders see a value over £42 in the absence of an offer from AB InBev?” Brito also said.

John Maxwell, the manager of the Ivy International Core Equity Fund in Kansas City, said on Wednesday that there’s a chance of a sweetened offer, though there’s also a risk the deal falls apart.

“We’re in SAB largely because we thought there was a chance that this could happen,” Maxwell said in a phone interview. “It’s a deal that’s been a long time coming, but I think it’s a tough deal to get signed.”

AB InBev doesn’t have “tremendous room” to raise the price, because the cost savings from this purchase won’t be as big as in the brewer’s past acquisitions, he said.

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