SAB Sabmiller

By Tripp Mickle 

SABMiller PLC's board on Friday recommended that shareholders approve Anheuser-Busch InBev NV's increased offer of GBP45 a share.

The decision brings an end to several turbulent weeks that jeopardized a more than $100 billion combination of the world's largest brewers.

The board's vote to recommend the deal came on the same day that Chinese regulators approved the merger. The regulatory approval by China's Ministry of Commerce, which was expected, was the final precondition AB InBev needed before moving forward with the transaction.

AB InBev shareholders and SABMiller shareholders now must vote on the deal, which is expected to close this year.

Shares of AB InBev, the world's largest brewer, were up more than 4% in recent trading in Brussels, while SABMiller's shares were up more than 3% in London.

SABMiller's board has had concerns about the deal in the wake of the British pound's plunge.To quell shareholder unease after the British pound's steep descent, the Belgian-based brewer AB InBev on Tuesday raised its cash offer to GBP45 ($59.10) a share, from GBP44 a share.

AB InBev had agreed in March to sell SABMiller's China business to China Resources Beer Holdings Co. The $1.6 billion deal would give the government-controlled brewer SABMiller's 49% interest in the joint venture known as CR Snow and full ownership of Snow, the world's top-selling beer by volume.

Taking over Snow would make China Resources the largest brewer in China, with a 30% market share, according to industry tracker Seema International Ltd. AB InBev has an estimated 18% market share in China, while Tsingtao Brewery has 22%, Beijing Yanjing Brewery Co. has 13% and Carlsberg A/S has 6%.

China's Ministry of Commerce is the fourth and final major regulator to approve the combination of the world's two largest brewers. The deal also was contingent upon approval in the U.S., Europe and South Africa.

With regulatory approval granted, AB InBev now must secure another recommendation from SABMiller's board for the deal. Then it can put the deal before shareholders for a vote.

The deal became a target for activist investors and traders after the U.K. voted to leave the European Union last month. Hedge funds including Elliott Management Corp. and TCI Fund Management Ltd. built stakes in SABMiller and pressure mounted for AB InBev to raise its offer.

AB InBev sought to mollify those forces with its new offer, but shareholders including Aberdeen Asset Management PLC felt the GBP1 increase was insufficient. Others such as Twin Capital Management LLC want the deal to go through.

SABMiller's board is weighing those viewpoints as it evaluates the new offer. AB InBev called this its final offer, a turn of phrase that under U.K. takeover rules prevents it from making another offer for six months.

The stakes are high for AB InBev. Buying SABMiller would give AB InBev access to the fast-growing African beer market and reduce its dependence on the U.S.

Write to Tripp Mickle at Tripp.Mickle@wsj.com

(END) Dow Jones Newswires

July 29, 2016 11:22 ET (15:22 GMT)

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