SABMiller Board Agrees to £44 a Share


Dear Client:

Well, after so much wrangling, here it is. We were right on this, if you read our wee-hours report: The Big Two do in fact have a deal in progress, and have asked for an extension for a "firm offer" under UK takeover rules; new deadline is October 28. And now we have numbers: Finance press the world 'round, including the Wall Street Journal, have just been reporting that "SABMiller's board has agreed to unanimously recommend to its shareholders AB InBev's proposal to pay £44 a share to buy the London-based brewer."

That's a 50% premium to its share price on Sept 14, "the last business day prior to renewed speculation of an approach from AB InBev," per official statement. And that values the brewer at £67.9 billion, or just over $104 billion USD. (SAB's shares were up around 9% in London upon market open today.)

To make SABMiller's largest shareholders, Altria and Santo Domingo, happy, AB InBev is offering a partial-share alternative for 41% of the stock, "essentially a combination of cash and stock translating into a lower per-share price of £39.03," at premium of approximately 33% to the closing SABMiller share price on Sept. 14.

This latest proposal, for the first time, also allows shareholders to get dividend payments. SABMiller shareholders could get "up to 28 cents a share in dividends paid by the London-based brewer for the six months to Sept. 30 and a further 94 cents a share for the six month period ended March 31 next year before a possible deal is completed. That amounts to $1.22 a share and increases the amount SABMiller's shareholders get by about £1.3 billion."

But if the deal falls through for regulatory reasons or shareholder disapproval, ABI has to pay SABMiller a reported $3 billion breakup fee.

There's still a long ways to go here. Stay tuned.

Until tomorrow, Harry

"A hero is no braver than an ordinary man, but he is braver five minutes longer." - Ralph Waldo Emerson

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