China Approves AB InBev Deal for SABMiller -- Update
29 July 2016 - 10:22PM
Dow Jones News
By Tripp Mickle
Anheuser-Busch InBev NV's takeover of rival SABMiller PLC
received the green light from Chinese regulators, giving the
Belgian brewer the final regulatory clearance it needs to move
forward with the more than $100 billion deal.
Friday's decision by China's Ministry of Commerce, which was
expected, raises the stakes of SABMiller's deliberation over AB
InBev's new offer. To quell shareholder unease after the British
pound's steep descent, the Belgian-based brewer on Tuesday raised
its cash offer to GBP45 ($59.10) a share, from GBP44 a share.
SABMiller's board is expected to meet to discuss the offer soon.
That meeting could be accelerated in the wake of China's regulatory
approval, a person familiar with the matter said. The board has
concerns about the deal in the wake of the British pound's plunge,
and it is unclear if it will still recommend the transaction, the
person added.
AB InBev had agreed in March to sell SABMiller's China business
to China Resources Beer Holdings Co. The $1.6 billion deal would
give the government-controlled brewer SABMiller's 49% interest in
the joint venture known as CR Snow and full ownership of Snow, the
world's top-selling beer by volume.
Taking over Snow would make China Resources the largest brewer
in China, with a 30% market share, according to industry tracker
Seema International Ltd. AB InBev has an estimated 18% market share
in China, while Tsingtao Brewery has 22%, Beijing Yanjing Brewery
Co. has 13% and Carlsberg A/S has 6%.
China is the fourth and final major regulator to approve the
combination of the world's two largest brewers. The deal also was
contingent upon approval in the U.S., Europe and South Africa.
With regulatory approval granted, AB InBev now must secure
another recommendation from SABMiller's board for the deal. Then it
can put the deal before shareholders for a vote.
The deal became a target for activist investors and traders
after the U.K. voted to leave the European Union last month. Hedge
funds including Elliott Management Corp. and TCI Fund Management
Ltd. built stakes in SABMiller and pressure mounted for AB InBev to
raise its offer.
AB InBev sought to mollify those forces with its new offer, but
shareholders including Aberdeen Asset Management PLC felt the GBP1
increase was insufficient. Others such as Twin Capital Management
LLC want the deal to go through.
SABMiller's board is weighing those viewpoints as it evaluates
the new offer. AB InBev called this its final offer, a turn of
phrase that under U.K. takeover rules prevents it from making
another offer for six months.
The stakes are high for AB InBev. Buying SABMiller would give AB
InBev access to the fast-growing African beer market and reduce its
dependence on the U.S.
Write to Tripp Mickle at Tripp.Mickle@wsj.com
(END) Dow Jones Newswires
July 29, 2016 08:07 ET (12:07 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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