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London - Anheuser-Busch (AB) InBev's [JSE:ANB] takeover of SABMiller SABMiller [JSE:SAB] moved closer to completion as China’s Ministry of Commerce approved the R1.45trn deal and the target’s shareholders began lining up in favor of the transaction after the Budweiser maker raised its bid.
Chinese competition authorities gave the “Megabrew” merger its last major regulatory nod on Friday after London-based SABMiller agreed in March to sell its 49% stake in Snow, China’s top-selling beer, to local partner China Resources Beer. The Snow deal is conditional on AB InBev buying SABMiller, and is expected to close in conjunction with that merger, according to AB InBev.
Major SABMiller shareholders have signalled they favour AB InBev’s sweetened bid as the target’s board prepares to meet to vote on whether to recommend the deal, people familiar with the process said on Thursday. AB InBev on July 26 raised its cash offer by one pound a share to £45 and also increased the amount of cash for shareholders who choose a cash-and-stock alternative. Marshall Wace, a London-based hedge fund, said on Friday it supports the new proposal. It controls more than 1% of SABMiller’s stock.
“I think it’s highly likely that the deal will ultimately be approved by the shareholders,” Trevor Stirling, an analyst at Sanford C. Bernstein, said by phone. “Given a report of shareholder consent, it appears likely that the board will approve the revised final offer.”
‘Significant milestone’
The Chinese decision is a “significant milestone” that follows approvals by regulators in the US, European Union and South Africa, Leuven, Belgium-based AB InBev said in a statement. All the preconditions to the deal have now been met, and the company aims to close the transaction this year, it said.
The deal was tested after SABMiller suspended integration of the two brewers following resistance from shareholders who say they haven’t been compensated enough for the pound’s recent plunge.
AB InBev gained 2.9% to €113.45 at 12:40 in Brussels, before trading in the shares was suspended at the request of the Belgian market regulator. SABMiller advanced 1.9% to £44.08 in London.
The Belgian brewer on Friday also reported second-quarter profit growth that missed analysts’ estimates on challenging markets in South America.
Earnings rose 4.3% to $4.01bn on an adjusted basis before interest, taxes, depreciation and amortization, the maker of Stella Artois said. Analysts expected 6.9% growth. Shipments unexpectedly fell 1.7%.
