(Reuters) – Brewer SABMiller has rejected an “informal” takeover offer from Anheuser-Busch InBev of about $100 billion as being too low, a media report said on Tuesday, pushing down its share price.
The proposal made last week was worth slightly over 40 pounds per share, according to Bloomberg, which cited sources familiar with the matter. SABMiller executives and some shareholders regarded a price closer to 45 pounds as representing fair value, it added.
SABMiller and AB InBev both declined to comment on the report, cited by traders as the reason behind a drop in SABMiller shares, which were down 3.2 percent at 36.4 pounds at 1236 GMT. As of Monday’s close, the shares had been up 25 percent since AB InBev’s takeover approach was revealed on Sept. 16.
A source familiar with the matter told Reuters that discussions were ongoing and there was talk of both sides possibly asking for an extension of the Oct. 14 deadline for a formal bid, given the complexity of such a deal.
UK-based SABMiller, the world’s No. 2 brewer, makes beers including Peroni and Grolsch, while Belgium-based market leader AB InBev’s products include Budweiser, Stella Artois and Corona.
Morningstar analyst Phil Gorham estimated that with $1 billion in cost-savings following a takeover, AB InBev should still be able to make the deal work at 40 pounds per share. With $2 billion of savings, it should be able to go to 44 pounds.
“It makes sense to start at 40 and go to mid-40s,” Gorham said.
At 40 pounds per share, a takeover of the world’s No. 2 brewer would cost nearly 65 billion pounds ($98.6 billion). At 45 pounds it would be close to 73 billion pounds ($110.7 billion).
A source familiar with AB InBev’s thinking said it “would not overpay”.
SAB Chairman Jan du Plessis last year successfully defended miner Rio Tinto, where he is also chairman, against a takeover bid from Glencore.
Still, SAB is seen by analysts as having somewhat limited strategic defensive options. It tried to buy Heineken last year but was publicly spurned. Other possible combinations mooted by analysts include Diageo, Carlsberg or Coca-Cola, though the likelihood of any of them coming to fruition is unclear.
Nomura analysts said on Tuesday they believed du Plessis was likely to put up a strong defence, “however we see no obvious white knight or poison pill that might prevent a deal from taking place”.
SAB reported earlier on Tuesday that group revenue, excluding currency effects, rose 6 percent in its second quarter, which ended on Sept. 30, while volumes rose 2 percent. That marked an improvement from the first quarter, when revenue rose 3 percent and volume was flat.
The performance update had been scheduled for Oct. 15, the day after the deadline for AB InBev to make a firm offer. SAB said it had brought forward its update to ensure the timely release of information during what is classed as an offer period.
“Overall this was a good trading statement in our opinion and the timing of it has the potential to ensure ABI has to offer a rich price for the company,” said RBC Capital Markets analysts in a note.
Yet the positive picture was clouded by the weakness of a range of currencies against the U.S. dollar, such as the South African rand. Reported group revenue, taking into account currency effects, fell 9 percent in both the first half and second quarter.
“While adverse currency movements have materially impacted our reported results, we have a strong business with exceptional long-term prospects,” Chief Executive Alan Clark said in a statement.
Growth was driven by demand in its Latin American and African markets, which are seen as being among the most attractive to AB InBev. Strength in those markets offset declines for SAB in Asia Pacific and North America.
($1 = 0.6598 pounds)