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Hedge Funds Watch With Interest As These Alcohol Giants Continue To Joust

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Anheuser Busch Inbev SA (ADR) (NYSE:BUD) is really intent on acquiring SABMiller, but it appears that SABMiller is equally intent on remaining independent. SABMiller’s Board of Directors has rejected Anheuser-Busch InBev’s takeover offer for the third time in a month, complaining Anheuser’s offer was only modestly higher than its previous one. SABMiller refused an enhanced offer of approximately $104 billion. Let’s take a closer look at the proposed merger and examine hedge fund sentiment towards the company that produces ‘The King of Beers’.


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According to a SABMiller press release, SABMiller’s board rejected Anheuser Busch Inbev SA (ADR) (NYSE:BUD)’s offer due to the fact that the proposals “very substantially undervalue SABMiller and its standalone prospects and growth potential”, that “the approach has been timed opportunistically to take advantage of SABMiller’s recently depressed share price”, that “the structure of the proposals, […] discriminates against the substantial proportion of SABMiller shareholders who may not be able to hold unlisted shares”, as well as “the highly conditional nature of the proposals, including significant regulatory hurdles in the U.S. and in China, on which AB InBev has not yet provided comfort to SABMiller.”

It is unclear whether Anheuser Busch will raise its offer yet again, but if it does, it may have to do so by October 14 because British law prevents Anheuser Busch from making another takeover offer for a period of six months after that date.

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Not all is lost. Anheuser Busch has a big supporter inside SABMiller’s board in Altria, which owns 27% of SABMiller. Altria is in favor of the deal, which if consummated, would create the world’s largest beer company and give Anheuser Busch’s zero based-budgeting management more synergies to realize.

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