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SABMiller to recommend AB Inbev deal; Chinese regulators approve deal, too

Anheuser-Busch interior
File Photo | Tom Nagel | Beacon

Updated 11:40 a.m., July 29 with SABMiller board recommendation and China approval - The board of brewer SABMiller says it intends to "recommend" that shareholders accept  Anheuser-Busch InBev's revised takeover offer, clearing the way for a shareholder vote on the mega-deal.
The decision comes only hours after AB InBev's cleared the last regulatory hurdle for the 79 billion pound deal. Chinese regulatory authorities gave the go-ahead Friday for AB InBev to sell SABMiller's stake in China's Snow Breweries.
That approval capped a week of tumult after some shareholders sought an improved offer due to shifts in currency values.
TheSABMiller board also said it intended to propose to a U.K. Court that its two biggest shareholders, Altria and BEVCO, be treated as a separate class of shareholders "and therefore to allow other SABMiller shareholders to vote on the revised offer separately." Other shareholders had objected because currency fluctuations had eroded the value of the bid.
Updated 7:55 a.m., July 26 with details of revised offer - Anheuser-BuschInBev has made what the brewing giant calls a “final offer” for rival SABMiller. The revised $103 billion proposal works out to an increase of roughly $1.30 per share, compared to the previous offer. SABMiller shareholders have been concerned about the overall value of the deal after the British Pound declined more than 10 percent in recent weeks.
The drop was sparked by the decision by voters in Britain to leave to leave the European Union. The Board of SABMiller will review the new offer  before commenting.

The North American operations of AB InBev are based in St. Louis.

Original story posted July 20:

The deal to create the largest beer brewer in the world has cleared a major hurdle. The Antitrust Division of the U.S. Department of Justice has approved the roughly $100 billion takeover of SABMiller by Anheuser-Busch InBev.

Under terms of the approval, AB InBev has agreed to measures designed to ease the concerns of independent distributors and smaller companies, especially craft brewers.

  • The company will not acquire a distributor if the deal would give it more than 10 percent of its annual volume being moved through wholly-owned U.S. distributorships.
  • AB InBev will not end deals with any wholesalers once the SABMiller deal closes.
  • Some parts of domestic sales programs and policies will be reviewed and changed if needed.

The brewing giant had already agreed to unload SABMiller’s labels in a side deal with MolsonCoors.

Edward Jones Equity Research Analyst Brittany Weissman follows the beverage sector. She has been tracking AB InBev-SABMiller, but more closely follows MolsonCoors.

“It really changes the composition of MolsonCoors' business,” she says.

“Right now, they are about 45-percent in the U.S. in terms of sales. That would increase to about two-thirds of sales being from the U.S.”

The deals should also help expand the MolsonCoors’ footprint outside the U.S.

“I think it's something that will provide them with a platform for future growth. So they can now distribute and sell and be in charge of that Miller brand in Canada and the European markets in which they operate,” Weissman tells St. Louis Public Radio.

In a statement released Wednesday, AB InBev Chief Executive Officer Carlos Brito says the combination with SABMiller will create what he describes as the world’s first global brewer.

“And extend the reach our iconic American brands, such as Budweiser, in markets outside the U.S.”

The takeover has been approved in 21 jurisdictions, including the European Union.

It still awaits regulatory clearance in China. In an effort to ease concerns in that country, AB InBev is selling SABMiller’s beer properties to China Resources Beer Holdings.

That deal gives the government-controlled brewer in the Asian-country ownership of the Snow label, which is considered the top-selling beer in the world by volume.

The U.S. approval comes one day before SABMiller shareholders gather in London for their annual meeting. There is speculation they might try to squeeze more money out of the rival brewer before signing off on the deal.

AB InBev officials say the takeover of SABMiller remains on track to close this year.

Follow Wayne on Twitter: @wayneradio

Wayne Pratt is the Broadcast Operations Manager and former morning newscaster at St. Louis Public Radio.