SABMiller backers benefit from falling pound

Britain’s decision to leave the EU has complicated a slew of deals.

In the latest twist, the plummeting pound is creating an unintended premium for a select few shareholders in brewing giant SABMiller.

Under the terms of Anheuser-Busch InBev’s $103bn takeover offer, SABMiller investors can choose £44 a share in cash or a mix of cash and stock valued at just over £39 a share when the deal was announced in October.

The partial share alternative was a tax-friendly option designed for SAB’s two biggest shareholders, Altria Group and BevCo.

But the pound’s drop against the euro has pushed its value to about £51.50 a share, 17% above the cash offer.

The catch is, investors taking the cash-and-stock option have to hold onto their shares for five years.

“Whether or not there’s a threat to the deal in terms of fairness is a fascinating question and for AB InBev to have left that risk open is a surprise,” said Tom Russo of Gardner Russo & Gardner.

Since the takeover, Mr Russo’s sold most of his firm’s SABMiller holding and built an $800m position in AB InBev.

“I’m pleased we had a chance to redeploy the cash from the deal. As for the specifics of the deal’s structure, it’ll be somebody else’s problem.”

AB InBev, based in Leuven, Belgium, is on track to close the combination in the second half of 2016, the company said last week, after obtaining approval from South Africa’s competition authority.

As part of the offer, AB InBev is willing to issue enough shares to cover the demand from tobacco maker Altria and BevCo, the holding company for Colombia’s Santo Domingo family, who have a combined 40.4% stake.

The shares won’t be listed for five years, and can’t be traded during that period, which may deter some from choosing the partial share alternative.