AB InBev's takeover of SABMiller remains under threat
The £50bn takeover of one of the world biggest brewers is expected to receive a vital green light from China this week - but remains under threat from the double threat of the Brexit vote and a UK court ruling.
AB InBev, the owner of Budweiser, agreed last year to buy SAB Miller, the FTSE 100 beermaker that counts Peroni and Grolsch among a stable of brands that spans the world. It agreed to pay investors with shares of the new combined company - and gave them a less valuable alternative of taking cash and shares.
The cash element was in sterling. Since the Brexit vote, the pound has fallen about 10% against other big currencies, leaving shareholders demanding more. On Tuesday AB InBev delivered, increasing its offer by £1 a share to £45 a share - an increase that will in aggregate cost it about £2bn more. It said that its offer was final, preventing it from making another increase.
That was still not enough for some. Aberdeen Asset Management, a top-10 shareholder in SABMiller, said the offer "remained unacceptable".
SAB directors now face a turbulent few days as they decide whether to recommend the final AB InBev offer. Later this week the final, and arguably most important, remaining regulatory clearance is expected when China's competition authority, Mofcom, rules on the takeover.
If the Chinese give the go-ahead, the SAB board is expected to meet this weekend. If they reject the offer, they face the unenviable task of placating all those shareholders who have already agreed to back it, including the two big investors - Altria, the American tobacco giant that owns Marlboro cigarettes, and Colombia's Santo Domingo family. Together the two own nearly 40% of SAB.
There is also the unenviable task of withdrawing from giant disposals that have been agreed to get the deal past other competition regulators. In Europe, for example, Asahi of Japan has agreed to buy Peroni and Grolsch.
If the SAB board accepts, they risk alienating institutional investors such as Aberdeen Asset Management ahead of possible shareholder votes to approve or reject the deal.
On top of that, there is still a risk that a British court could upset their plans.
SAB told the stock market last year that because there were two different offers - shares or cash and shares - it would have to ask a judge whether the structure of the deal had in effect created two different classes of shareholder.
If the judge decides it has, there would be two shareholder votes, increasing the chances that the deal could be blocked.