Tuesday 22 September 2015 by William Arnold Company updates

Anheuser-Busch InBev approaches SABMiller in non-hostile offer

THIS CONTENT IS SUITABLE FOR WHOLESALE INVESTORS ONLY

Anheuser-Busch InBev has stated its interest in some form of merger with SABMiller. The company now has until 14 October to formally present a full plan to shareholders

Anheuser-Busch InBev (AB InBev) has stated its interest publicly in SABMiller. AB InBev now has until 14th October 2015 to formally table a proposal or walk away for 12 months as per requirements under the UK's Panel on Takeovers and Mergers (although SABMiller could request an extension). AB InBev stated that it’s, ‘intention is to work with SABMiller's Board toward a recommended transaction.’

Items of note

  • Any tie up will be complicated and will be met with intense regulatory scrutiny – particularly in the USA and China. It will also have to involve Molson Coors, SABMiller's US joint venture partner
  • The attitudes of SABMiller's substantial shareholders: Altria Group, Inc. (27% shareholding) and BevCo Ltd, the Colombian Santa Domingo family investment vehicle (14%), are as yet unknown
  • Based on a 30% uplift on SABMiller's equity price, the company would cost circa US$100bn
  • Until a full proposal is presented, specifically outlining the proposed financing mix of debt and equity, the possible impact to the credit profile of the combined entity is unknown. However AB InBev does have a stronger credit rating that SABMiller at A compared A- respectively (S&P)
  • If a deal is made and a full proposal presented, credit analysis of the transaction and its possible impact for SABMiller bondholders will be completed

Earn over
6% pa* with Corporate Bonds

Subscribe to The WIRE newsletter

Sign up to a free weekly newsletter to get the latest investment news.