SAB Miller beer brand Peroni

It was all going so well for the AB InBev takeover of SAB Miller. Last week it received clearance in the US, and with just China to come it looked home and hosed. But unhappy SAB Miller investors have increasingly begun questioning the value of the deal, given the Brexit-driven collapse in the pound to drag one of the largest corporate takeovers of all time back to the brink of collapse.

Shareholder ire is directed at the cash portion of the bid, which suddenly became more than 10% less valuable after the UK quit the EU and sent the pound tumbling against the dollar. The twist is that the pound’s collapse makes the cash deal considerably less beneficial compared with the cash and shares offer being taken up by SAB’s biggest shareholders Altria and the Santo Domingos family. This alternative offer was initially discounted, but is now in effect worth more because of currency shifts. However, most investors feel they can’t opt for it because it mandates a five-year lock-in period for the new shares.

AB InBev responded by increasing its bid this week, issuing a “final” offer raising the cash portion from £44 per share to £45, and moving the partial share offer up to £51.14. But this was not enough to quell the murmurs of discontent from major shareholders, with Aberdeen Asset Management saying the new deal was “unacceptable”. Another twist emerged on Thursday, with a note to staff from the SAB board telling them to cease working on the integration process. The SAB board must now decide whether to recommend the new offer to shareholders or not.

The uncertainty hit SAB’s shares, which fell 2.9% to 4,313p from Monday to Thursday lunchtime despite the £45 per share offer. AB InBev’s shares are down 3.5% to $110.45 over the same period. Analysts at SG remain confident AB InBev can get the deal done, even if it has to go hostile. “With Altria and the Santo Domingos’ together controlling 41% of the shares, that hurdle does not look impossible,” SG stated. “We think the bottom line is that SAB shareholders will not reject the deal and see SAB’s shares return to £38-£40.”

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