I’m struck by a couple of transactions in the last 6 months which have some unusual characteristics….and absolutely demonstrate the passive nature of both institutional and retail shareholders these days. The one in particular which I want to look at today is SAB Miller / Anheuser Busch.
The announcement of the transaction between SAB Miller and Anheuser-Busch INBEV in the form of the public statement issued on 11th November 2015 forms the basis on which the vote by shareholders was cast in favour of the deal. Aside from the general statements around complementarity in terms of geographical reach, advantages of scale, access to growing emerging markets and a commitment to synergies in terms of running cost reduction of USD 1.4 billion (albeit with no firm date commitment), there is little in the document with regard to the final shape of the transaction.
Since November 2015, the following headline events have taken place:
- SAB Miller joint venture interest of 58% with Milson Coors for the consideration of USD 12.2 billion
- The sale of Peroni, Grolsch, and Meantime by AB Inbev to Asahi for the consideration of USD 2.55 billion.
- The Brexit vote with the resulting devaluation of sterling, which presumably will have an impact on any UK based assets in the group.
- There are no doubt other agreements reached with country regulators in certain major markets which we are not privy to…but may also have an impact on the potential for growth in those markets given the already dominant position that the two companies hold.
The first question is are these changes material in the context of the deal…judge for yourself. The sale of the JV and the assets in Europe amount to around 20% of the overall value of the deal.
The second question is are they material enough to warrant another vote?
A third question might be what the cash generated has been used for and whether the new shareholders will benefit from it.