It’s all about the beer, right?

Apparently not, actually – as this press release from the University of Warwick, Coventry, England, about the proposed AB In Bev/SAB Miller merger makes clear. The word “beer” is used only once…

If you are looking for expert comment on AB InBev raising its takeover offer for SABMiller John Colley, of Warwick Business School, is a Professor of Practice, a former CEO of a FTSE 100 company and researches large takeovers.

Professor John Colley said: “Ab InBev is being forced to transfer many of the synergy benefits to SABMiller’s shareholders through constantly raising the price. They have clearly been structuring the offer to suit the two main shareholders who face a major tax bill if the consideration is paid in cash.

“The offer is partially unlisted shares, which will allow shareholders to take profits at some stage in the future. However, in all bids a time comes when the bidder has to stand behind the offer, and force the shareholders to make a decision. Unless AB InBev does so soon all the future synergy benefits will be lost to SAB Miller’s shareholders.

“AB InBev’s determination to do this deal may ultimately be a problem for them. Advisor 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? Management will expect to benefit as they will preside over a much greater business resulting in greater pay, power and status. Customers are unlikely to benefit and shareholders’ ultimate prospects are distinctly risky.

“The global beer market overall is largely flat and in some regions is declining as other beverages such as wine continue to penetrate. Micro-brewers and their highly differentiated cask ales also continue to make progress. As a consequence cost, product and distribution rationalisation become an attractive way of increasing shareholder returns. That is provided AB InBev does not pay too much for SABMiller.”