The chairman of SABMiller (SBMRY) said the brewer would consider the attractiveness of a $107 billion offer by Anheuser Busch InBev (AHBIF) after the merger had undergone the regulatory process.
The takeover of the London-listed brewer has come under scrutiny in recent weeks as a drop in the British currency has reduced the relative attractiveness of the all-cash offer aimed at most SAB shareholders.
A source familiar with the matter told Reuters on Wednesday that the company’s board was weighing the terms of AB InBev’s offer, amid rising shareholder disquiet.
At the company’s annual general meeting on Thursday, Chairman Jan du Plessis said the board would consider the offer after receiving preconditions from Chinese regulators, and also take into account the drop in sterling since the UK’s vote in June to leave the European Union. The firm would then write to shareholders, he said.
The maker of beers such as Castle Lager, Peroni and Grolsch earlier reported group net revenue fell 4% in its first quarter, ended June 30, with volume flat.
Du Plessis described the pending takeover by AB InBev as a “significant distraction,” but said the deal was right for the company and its shareholders.
It received approval on Wednesday from U.S. antitrust regulators, after the two companies agreed to sell assets and preserve competition from independent craft brewers.
Australia, Europe and South Africa have also cleared the deal. The companies are waiting for China to approve it although a proposed sale of SABMiller’s stake in CR Snow was expected to lead to clearance.
The deal is expected to close by the end of the year.
Some shareholders expressed concern on Thursday about the impact of Brexit and the fall in sterling.
Concerns were also voiced about a stock-and-cash alternative structure, created as part of the takeover and designed for SAB’s biggest investors, cigarette maker Altria and Colombia’s Santo Domingo family.
Du Plessis defended the partial share alternative (PSA) structure, saying it had been vital for securing approval of the takeover from the two major shareholders.
He said he would “make a point” of asking AB InBev to issue shares as part of a share swap, in order for SABMiller shareholders to have a holding in the newly-merged company.
When the original deal was announced in November, the PSA—which avoids triggering large tax bills—was worth about 39 pounds ($51.45). The cash offer was 44 pounds per share.
But the recent fall in the pound and rise in ABI’s shares have increased its value to about 51 pounds, representing a premium of around 15% to the cash offer.
That disparity has apparently tempted activists into SABMiller’s shareholdings. Both The Children’s Investment Fund (TCI) and hedge fund Elliott Advisors have taken small stakes, prompting talk that the two could lead a push for AB InBev to bump up its cash offer.