Probe into takeover of SABMiller

© Somchai Jongmeesuk – 123RF.com

In the middle of last month, the competition commissioner said he expected to meet Tuesday’s deadline, but at the weekend, the commission confirmed there were issues that still needed to be considered.

Itumeleng Lesofe, the spokesman for the commission, said the merging parties were aware of the outstanding issues. "The assessment of the transaction is unlikely to be completed by 5 April as previously anticipated," Lesofe said.

This will be the third extension requested by the commission. Extensions are granted by the Competition Tribunal, after input from the merging parties, generally for 15 days. But after objections from the merging parties, the previous extension was granted for only 10 days.

No details were given of the outstanding issues and whether they related to last-minute input from Economic Development Minister Ebrahim Patel. The department did not respond to approaches for comment.

Katishi Masemola, general secretary of the Food and Allied Workers Union (Fawu) confirmed on Friday that he would be making the union’s submission this week.

The AB InBev team — which has put itself under a tight deadline for completion of this $102bn transaction — may have been troubled by signs of continued difficulties and delays in the processing of SABMiller’s proposed restructuring of Coca-Cola’s African bottling infrastructure.

After extensive and delayed input from Patel, the parties finally agreed to a timetable for tribunal hearings: they are set for three weeks next month. AB InBev CEO Carlos Brito wants to minimise the period of anxiety.

Last week, the merging parties notified the European Commission of the planned merger. The commission has set an initial phase 1 deadline to rule on the deal, which can be extended. In the US, the Department of Justice is continuing to evaluate the merging parties’ proposal to sell MillerCoors to Molson Coors.

Meanwhile, analysts have dismissed as "unlikely" a suggestion by a Bloomberg columnist that the Brexit battle (to decide whether the UK will stay in the European Union) could cause disruption because of the offer’s dual format. Investors can either take £44 for each SABMiller share or a mix of cash and AB InBev shares, which are listed in Belgium and denominated in euros. When details of the offer were announced in November, the cash and share offer was valued at £41.85.

The recent Brexit-related slide in sterling has lifted the cash and share offer to £46.

One analyst said such a value differential would not be enough to persuade significant numbers of SABMiller shareholders to opt for the cash and share offer, as the AB InBev shares offered will be unlisted and subject to a five-year lock up. The option chosen must be for the full amount of SABMiller shares held.

The cash and share offer was designed for the benefit of SABMiller’s two major shareholders, Altria and Santo Domingo. They own a combined 41.6% of SABMiller and wish to remain major shareholders in the merged entity.

The partial share offer is subject to a maximum 326-million AB InBev shares being issued.

To the extent the other SABMiller shareholders opt for the cash and share mix, Altria and Santo Domingo will have to scale back their allocation.

Completion of the deal is now expected to be September.