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Johannesburg - The fourth largest shareholder in SABMiller [JSE:SAB] on Monday rejected Anheuser-Busch (AB) InBev's R1.4trn takeover offer as too low, piling pressure on the Belgian brewer to sweeten the deal that would a create beer colossus.
The offer has already been snubbed by the board of SABMiller, saying the £42.15 per share valuation was "very substantially" under par.
"We have confidence in the board and we will rely on their judgement. They have said the price is too low and we agree with them," said Dan Matjila, chief executive of Public Investment Corporation (PIC), which owns about 3% of SABMiller.
The rejection by the PIC, as well the board, is testing the determination of AB InBev to create a R3.7trn global brewing giant that would control about one third of world's beer market just days before Wednesday's bid deadline.
The brewer of Budweiser and Stella Artois may raise its offer to as much as £44 per share, source close to the matter told Reuters on Sunday.
The PIC, which manages more than R1.6trn in South African government employee pensions, also needed more details on the AB InBev's proposed secondary listing of the combined brewer on the JSE, Matjila said.
"It may not be in our best interests to liquidate a blue chip counter on the JSE without clearly understanding how that money finds its way back to JSE," he said.
A Johannesburg listing of the combined entity, as SABMiller is, is one of the key considerations for South Africa-based funds because they are required to limit their exposure to international stocks.
SABMiller rejection “lacks credibility”
On Thursday, AB InBev sought to rally SABMiller shareholders behind its £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 last Wednesday “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, AB InBev said on Thursday.
On Friday, SABMiller doubled a pledge to cut costs as it seeks to rally shareholders around its rebuttal of the takeover.
Annual savings in the 12 months through March 2016 should exceed R5.7bn and reach R13.95bn by 2020, the brewer said on Friday in a statement. The company had previously targeted about R6.6bn in annual savings by 2018.
The onus is on SAB to prove its worth more after saying AB InBev’s proposal “substantially undervalues” the brewer of Grolsch and Peroni. Under UK regulation rules, AB InBev has until October 14 to make a formal offer for SABMiller.
Altria Group, SABMiller’s largest shareholder with a 27% stake, has urged the board to accept the proposal by AB InBev, which came out on Thursday criticising the target company for its refusal to engage, saying its resistance lacks credibility.
- Reuters and Bloomberg.
