Beer Giant SABMiller Rejects $104 Billion Takeover Bid From AB InBev

By Bill Chappell

Published October 7, 2015 at 8:38 AM CDT

SAB Miller, the world's second largest beer brewer, has rejected a $104 billion takeover offer. Here, one of the company's trucks leaves the Newlands Brewery in Cape Town.

For Anheuser-Busch InBev, the third time was not the charm. After the Belgian beer giant boosted its offer to purchase SABMiller, its largest rival, SABMiller rejected the $104 billion cash bid Wednesday, saying AB InBev "still very substantially" undervalues the maker of Miller Lite and Coors.

"SABMiller is the crown jewel of the global brewing industry, uniquely positioned to continue to generate decades of standalone future volume and value growth for all SABMiller shareholders from highly attractive markets," says SABMiller Chairman Jan du Plessis.

With its roots in South Africa and its current headquarters in London, SABMiller's board unanimously rejected an offer Wednesday that values the company at 42.15 British pounds ($64.34). The board had already rejected two recent AB InBev purchase bids, including one on Monday for 40 pounds and an earlier offer at 38 pounds.

The deal is being spurned one year after SABMiller was rejected in its own attempt to take over Dutch-based brewer Heineken — a move that was seen as being at least in part an attempt to hold ABInBev at bay.

"AB InBev needs SABMiller but has made opportunistic and highly conditional proposals," du Plessis said earlier today, "elements of which have been deliberately designed to be unattractive to many of our shareholders. AB InBev is very substantially undervaluing SABMiller."

Together, AB InBev and SABMiller produce more than 70 percent of the beer in the U.S. market, with AB InBev alone responsible for roughly 45 percent. The combined company would have annual revenues of around $64 billion.

In proposing the takeover, Anheuser-Busch InBev says it wants to create "the first truly global beer company."

"AB InBev is disappointed that the Board of SABMiller has rejected both of these prior approaches without any meaningful engagement," the company says.

If it were to come to pass, the deal could have global repercussions for the beer industry — in the U.S. and also in areas where SABMiller currently dominates, notably in Australia and large sections of India, Eastern Europe and Africa.

In some of those markets, the proposed new company would consolidate popular brands; in others, it would likely be forced to sell portions of its business to comply with government regulators' requirements.