SABMiller’s and AB-InBev’s shareholders approve of merger

By the time you will be reading this, SABMiller will be no more. After winning shareholder approval on 28 September 2016, AB-InBev will drop the SABMiller name and begin trading as a combined company on 11 October 2016. SABMiller ceased trading on the London and Johannesburg stock exchanges on 5 October 2016.

The tie-up of the world’s two largest brewers concludes a year of financial wrangling, after the deal won the support of over 95 percent of SABMiller’s shareholders, shrugging off a minority protest vote by investors who claimed the GBP 45 a share takeover offer was too low. In July, AB-InBev was forced to raise its offer after some activist investors in SABMiller revolted following the pound’s post-Brexit plunge.

The weaker currency meant the takeover increasingly favoured SABMiller’s two major shareholders, the cigarette maker Altria and Colombia’s Santo Domingo family, who will receive both cash and shares for their combined 40 percent stake.

Following a UK court verdict, both shareholders were ruled to vote separately, meaning SABMiller’s board needed to secure 75 percent of the remaining 60 percent of its investor base.

The deal’s support was diluted further by the fact that many hedge funds, which had bought into SABMiller in recent months, were ineligible to vote because they held their stakes in derivatives rather than in shares.

These twin hurdles raised concerns that rebel funds might find it easier to block the deal. However, in the end, the vote was in favour of AB-InBev’s offer.

In volume, the combined AB-InBev/SABMiller will be more than double the size of its closest rival, Heineken, which will have an 11 percent global market share, according to industry tracker Plato Logic.

But AB-InBev’s share of global beer profits will be four times greater than Heineken’s, according to analyst estimates.

Incidentally, analysts have worked out that because of the price tag – USD 100 billion plus - it will take about 10 years for AB-InBev to recoup what they spent on SABMiller, nearly five times as long as it took to recover the USD 53 billion they spent on Anheuser-Busch in 2008.

After the deal closes, AB-InBev is expected to finalise the sale of SABMiller’s units in central Europe, including Pilsner Urquell. They agreed to sell SABMiller’s businesses in Hungary, Romania, Czech Republic, Slovakia and Poland to gain approval by Europe’s regulators. Combined, these businesses accounted for about USD 2.3 billion of SABMiller’s sales, according to analysts