August 04, 2016 | Consumer Discretionary | Europe | Ended

SABMiller / AB InBev: Scheme Vote Considerations

AB InBev’s 26-Jul-16 revised and final offer, combined with SABMiller’s recommendation, has essentially eliminated any possibility of a higher bid. So the question is, what can break this deal? Funds received their bump (albeit light) and now hope the deal closes at 4,500p. With all pre-conditions and major antitrust approvals cleared, and with the AB InBev vote outcome unlikely in question, there are two deal-breaking hurdles: 1) the emergence of additional dissenting shareholders, upset about the takeover premium and treatment of minorities; and, 2) the voting strategies and actions of the event driven and risk arbitrage funds (collectively, “arbs”). In this research report, we assess these risks.

Contents 1. Considerations Behind a Separate Vote and Attendance Levels 2. Risk Arbitrage Activity, Voting Strategies and Game Theory 3. Long-Only Shareholder Analysis and Complaints from Dissidents 4. Relevant Precedent UK Schemes with Split Votes 5. The Companies’ Current Strategies and Options 6. ‘No Increase’ Statements and AB InBev’s Ability to Bump Again 7. Break Price Analysis and Timing to Deal Completion 8. Implied Probability of Completion and the Risk Arbitrage Spread (29 pages)

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