There is no doubt what the biggest corporate story of the week was after AB InBev finally showed its hand on SABMiller to bring to a head one of the market’s longest-running rumours.
UK-listed SABMiller told the market of AB InBev’s initial approach on Wednesday morning, which lit a rocket under the shares - propelling them up 19.9% to 3,614p, reaching as high as 3,737p soon after the announcement. In New York, AB InBev rose 6.9% to $115.44. AB InBev now has a deadline of 14 October to either make a concrete bid or walk away. Analysts were generally predicting AB InBev would have to stump up about 4,400p a share, representing a hefty 46% premium on SAB’s Tuesday night closing price of 3,014.5p.
“The fundamental logic for this deal is unchanged and as strong as ever,” said analysts at Canaccord Genuity. “ABI’s track record, combined with fewer growth opportunities than historically for SABMiller, lead us to judge that the SABMiller free float will be basically amenable.”
The deal faces several hefty regulatory hurdles, though these are generally viewed as surmountable. Bernstein analysts noted it would likely sell SABMiller’s stake in MillerCoors in the US and possibly its 49% stake in CR Snow in China, “but it is also likely that Molson Coors and CRE would be willing purchasers respectively”.
Meanwhile, investors in Morrisons endured another tough week following the disappointing interim results, with a cut in profit forecasts from HSBC and a ratings downgrade from Moody’s. The share price sank another 9.8% to 159.1p after last week’s first half pre-tax profits collapsed by 47.2% to £126m. A hefty 4.5% was knocked off its value on Monday after a note from analysts at HSBC warned the company needed to do more to get its ailing sales back on track. Morrisons stock slid to an 11-month low of 152.9p on Tuesday before making a slight recovery.
Ocado edged up 0.3% to 316.7p on Tuesday after its Q3 sales update, but leapt 8.7% on Thursday morning to 347.2p after positive broker notes.
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