Takeover rules forced hand of SABMiller

The world’s largest brewer wanted to keep the biggest deal of the year under wraps. Market chatter and the UK’s unique takeover rules got in the way.

The Takeover Panel forced SABMiller to release a statement about an approach from Anheuser-Busch InBev after speculation on Tuesday sent London-based SAB- Miller’s shares up as much as 4.1%.

The disclosure triggers a 28-day timeline for a formal, fully financed bid. Known as the put-up-or-shut-up rule, if AB InBev decides to walk away from the transaction it can not come back for six months.

Stringent rules on disclosure require a company to confirm or deny any hint of a deal. The Takeover Panelintroduced the rules in 2011, affecting deals by firms including Pfizer and Glencore.

“Media attention following disclosure of deal negotiations can be disruptive to the companies, and can kill an otherwise valuable deal” said John Coates, a professor of law and economics at Harvard University.

Of the £650bn (€886bn) in acquisitions of UK firms announced since September 2011, when the new rules came into effect, £105bn have been terminated or withdrawn, according to data compiled by Bloomberg.

Terminated deals last year included Pfizer’s rejected £80bn takeover bid for AstraZeneca, and Carillion’s spurned attempts to merge with Balfour Beatty.

“Bidders are reluctant to start a process because of the rules,” said Coates.

That was not the case with AB InBev and its long-awaited pursuit of SAB- Miller. AB InBev chairman Olivier Goudet contacted his counterpart at the smaller brewer, Jan du Plessis, this week to propose discussions on a potential deal.


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