NEW YORK (The Deal) -- Still hoping to turn SABMiller (SBMRY) from a reluctant companion into a full-time drinking buddy, Budweiser maker Anheuser-Busch InBev (BUD) on Monday raised the tab yet again for its target.
The Leuven, Belgium-based suitor, run by CEO Carlos Brito and backed by his Brazilian compatriots at 3G Capital, is now offering about £70 billion ($107.5 billion), in the hope of clinching a deal by Wednesday's deadline. The cash offer on the table is 4,350 pence a share compared to the previous offer of 4,215 pence a share, and amounts to a 48% premium over SABMiller's undisturbed share price.
AB InBev faces a 5 p.m. Wednesday put-up-or-shut-up deadline unless SABMiller agrees to ask the U.K. Takeover Panel for an extension, though many industry watchers are scratching their heads over how high the eager suitor may be willing -- or able -- to go.
"AB InBev's determination to do this deal may ultimately be a problem for them," said John Calley, a professor at Warwick Business School in the U.K., via email. "Adviser fees will run to hundreds of millions of pounds much of which will be success-based. How much impartial advice do you get when the stakes are so high?"
SABMiller shares were recently up 0.7% in London at 3,692.50 pence. AB InBev shares were up 0.3% in Brussels at €98.6, for a market value around €159 billion ($181 billion). In the U.S., SABMiller's ADRs are down 3% to $55 while BUD is up a fraction to $112.
The new proposal is pre-conditional on SABMiller's largest shareholders opting for a partial share alternative for the 41% they hold together. The latest offer tweaks the terms of the offer to tobacco group Altria Group (MO) , which came out in support of the previous proposal, and the Santo Domingo family's Bevco Co. Ltd.
While still offering them 0.483969 shares of AB InBev restricted stock with a five-year lockup, AB InBev has raised the cash part of the equation to 3,560 pence a share from 2,370 pence a share. AB InBev says the tweaked offer values each SABMiller share at 3,888 pence a share, or 33% above SABMiller's undisturbed share price.
In Monday's statement, AB InBv said it expects that most other shareholders would opt in favor of the cash offer, and that it will not be seeking SABMiller's board's recommendations with respect to the partial share alternative.
SABMiller did not immediately put out a response to the new offer, but chairman Jan du Plessis has so far stood his ground to defend the "crown jewel of the global brewing industry."
As Bevco continues to remain silent on what it will do with its shares, SABMiller has rallied support from two big institutional investors - Aberdeen Asset Management and Kulczyk Investments, both of whom came out against AB InBev's previous bid last Friday.
A deal would combine about 400 brands accounting for one out of every three beers sold on the planet.
In its most recent fiscal year, SABMiller posted $22 billion in sales, as larger volume growth in Africa and Latin America was offset by weaknesses in China and North America. SABMiller dates back to the foundation of South African Breweries in 1895 during the Johannesburg gold rush. Adding SABMiller would give AB InBev greater exposure to emerging markets, which account for about two-thirds of SABMiller's sales.
AB InBev had revenue of $47.1 billion in 2014 and employs 155,000 people in 25 countries.
-Armie Margaret Lee contributed to this report.