On Wednesday, Nov. 11, Anheuser-Busch InBev (BUD, Financial) and SABMiller PLC (SBMRY, Financial) reported a merger agreement that would combine the world’s two largest beer makers. After nearly two months of negotiations, SABMiller has agreed to the acquisition which, at its final price, values SABMiller at $108 billion or $66.50 per SABMiller share.
After board agreement, the acquisition will now undergo regulatory approval which could take up to a year to finalize. Under terms of the agreement SABMiller will be required to sell its MillerCoors LLC ownership and its Miller portfolio in order to reduce competitive hurdles that could slow the regulatory approval process.
The deal is expected to result in $1.4 billion worth of cost synergies over four years for AB InBev. At its offering price the transaction provides a premium of approximately 50% above SABMiller’s September trading price. The stock transaction will mainly be paid to shareholders in cash; terms of the deal also offer an alternative including cash and unlisted stock. The alternative deal transaction is primarily targeted for SABMiller’s leading shareholders, Altria (MO, Financial) and the Santo Domingo family, which will both also likely receive board elections upon completion of the merger.
Leading up to the merger, investment manager Tom Russo (Trades, Portfolio) of Gardner Russo & Gardner has been actively taking bets on both AB InBev and SABMiller. Russo currently owns 0.32% of AB InBev’s outstanding shares. In 2015 he has added a total of 4.68 million shares of AB InBev to his portfolio. Also in 2015, Russo increased his share position in SABMiller by 650 shares, currently holding a total of 30,600 shares.
