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SABMiller rejects $104bn takeover bid

BRUSSELS, October 13, 2015

SABMiller, the world's second largest brewer, has promptly rejected an improved offer from bigger rival Anheuser-Busch InBev, saying that its 68 billion-pound ($104 billion) valuation was insufficient.

Earlier Belgium-based AB InBev said it was willing to pay 42.15 pounds in cash per SABMiller share, having already made two prior offers at 38 and 40 pounds, the increase made possible if its two biggest shareholders accept a lower value share-and-cash alternative offer.

But SAB Miller said its board, excluding the directors nominated by its biggest shareholder Altria, has unanimously rejected the proposal.

"It still very substantially undervalues SABMiller, its unique and unmatched footprint, and its standalone prospects," the UK-based company said in a statement.

SABMiller chairman Jan du Plessis had earlier described his company as "the crown jewel of the global brewing industry" and described AB InBev's proposals as designed to be unattractive to many shareholders.

AB InBev is offering an alternative to the cash offer of partial payment in shares, limited to about 41 percent of SABMiller stock and expected to be taken up by the brewer's top two shareholders, Altria and the Santo Domingo family of Colombia, who together own 40.5 percent.

Under this offer shareholders would get 2.37 pounds a share plus 0.48 special unlisted AB InBev shares which are convertible into ordinary stock after a five-year lock-up period.

With AB InBev intending to buy nearly 41 percent of SABMiller via the partial unlisted shares and cash offer alternative (PUSCA), SABMiller noted this put an implied price tag on SABMiller's equity of just 65 billion pounds.

AB InBev said it expected most SABMiller shareholders would accept the all-cash offer but emphasised the proposal was conditional on getting the support of both Altria and BevCo, the Santo Domingo family's company which holds a 13.9 percent stake.

Altria, the tobacco group which has 26.6 percent of SABMiller, said in response it supported the bid and would be prepared to opt for the share alternative.

But AB InBev later issued a statement saying it "wishes to clarify that it does not currently have the support of BevCo Ltd for the the proposed combination."

Meanwhile SABMiller said its board members, excluding those from Altria, had been unanimous in rejecting the approach. Two directors are Santo Domingo nominees.

Analysts at RBC Capital Markets also said the proposed offer appeared some way below a "knock-out" bid. -Reuters




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