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SABMiller just said no to $100 billion offer from AB InBev

The world’s biggest-ever brewing merger isn’t going to come easy.

Bloomberg reports Tuesday that SABMiller Plc (SBMRY), the company behind Miller, Leinenkugel and Foster’s among others, has rejected as too low a first informal from AB Inbev (BUD) valuing the company at $100 billion.

AB InBev, which brews Budweiser, Beck’s and Corona, had made overtures to SABMiller in September, and has until next Wednesday to present a firm offer under the rules of the London Stock Exchange, where SABMiller is listed. Bloomberg reported that AB InBev offered around 40 pounds a share, some 33% above where they had been trading before the news broke and about 10% above their current level of GBP36.33. However, it said executives at SABMiller were holding out for an offer in the region of 45 pounds. SABMiller didn’t comment.

The difference between the two may not look too large, but the London-based company’s shares fell sharply in response to the news, as investors pared back their expectations of a deal coming to fruition. The deal already faces formidable opposition on antitrust grounds, due to the dominant market position that a merger would give the combined company. The attitude of SABMiller’s key shareholders towards a deal also remains in doubt. There are also concerns that AB InBev’s balance sheet is already too stretched for such a big acquisition.

Earlier Tuesday, SABMiller had taken the market by surprise by releasing some details of its second-quarter performance over a week ahead of schedule. In its release, the company played up the strength of its operations in Africa and Latin America, widely seen as the operations that AB InBev is most interested in. Sales volumes rose by 6% in Africa from the three months to June, and by 7% in Latin America.

Unfortunately, the drastic falls in many emerging market currencies (not least the key SABMiller market of South Africa) means those sales generated 9% less in dollar terms than in the previous quarter. The company eked out a 3% rise in revenue in Europe, but sales fell 2% in North America as its MillerCoors joint venture struggled.