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International consumer M&A

AB InBev-SABMiller

Creating a global leader

AB InBev’s £78.4bn acquisition of SABMiller created the world’s first truly global brewer, with operations in almost every major beer market.

The transaction, which completed on 10 October 2016 in line with an ambitious timetable, was the biggest ever takeover of a London-listed company and one of the most complex acquisitions in history.

The deal achieved significant market recognition too, helping the firm win:

  • Global M&A Deal of the Year: Grand Prize at the American Lawyer Awards 2016;
  • Benelux M&A Legal Adviser of the Year at the Mergermarket European M&A Awards 2016;
  • Global M&A Deal of the Year: Central and Eastern Europe at the American Lawyer Global Legal Awards 2017 (for our work advising on the sale of SABMiller's central and eastern European assets to Asahi); and 
  • Matter of the Year at the Global Competition Review Awards 2017.

The Financial Times Innovative Lawyers Europe survey 2016 ranked our work on the deal as 'Standout' in the 'Mergers and Acquisitions' category.

The antitrust challenge 

Executing the takeover of the world’s no. 2 brewer by the no. 1 was extremely challenging from an antitrust perspective.

Merger filings were needed in more than 30 jurisdictions and remedies were required in more than half to deal with regulators’ concerns over antitrust and public interest implications. And this was a high pressure process – AB InBev wanted to close as quickly as possible and the deal carried a $3bn break fee, the largest ever negotiated.

Alongside this we had to devise a unique transaction structure to take into account numerous considerations including AB InBev and SABMiller’s corporate objectives, shareholder priorities (including obtaining tax-free treatment for SABMiller shareholders who wanted to receive equity as part of the transaction) and transactional taxes (such as stamp duties), together with UK and Belgian law and applicable regulatory rules.

Creating a narrative

Executing a deal of this size required a clear strategy and meticulous preparation.

To make the regulatory approvals process as smooth as possible, we worked with AB InBev’s PR and financial advisers to craft a narrative that explained the deal’s benefits for investors, regulators, consumers and the market.

We also oversaw AB InBev’s web, video and social media strategies to ensure all communications were consistent with regulatory filings and UK and Belgian rules.

Anticipating the remedies

Our antitrust strategy documented the precise order in which the filings needed to be made around the world.

We then established a centrally co-ordinated global team (comprising our lawyers and leading practitioners from more than 80 national firms) to implement the plan. 

We assessed what remedies would be needed to avoid prolonged investigations in key jurisdictions and pre-negotiated the sales of assets in multiple countries. The most significant remedy packages were devised with AB InBev before it had even approached SABMiller, to ensure the smoothest possible path for the transaction.

We also proactively dealt with public interest concerns, for example in South Africa where AB InBev agreed a set of public interest commitments with the Minister of Economic Development. These included a secondary listing for the combined group on the Johannesburg stock exchange, development initiatives, local investment and a continued commitment to SABMiller's broad-based black economic empowerment scheme.

Managing shareholders, planning strategy

The novel structure combined an offer and merger process in Belgium with a UK scheme of arrangement. We also created a new holding company, listed in Belgium, Mexico, South Africa and the United States.

To manage the competing demands of SABMiller's shareholders, we designed a bespoke, unlisted security in the combined company that is convertible to ordinary shares after five years. The amount of securities offered was capped to limit dilution of the AB InBev shareholders and help all parties achieve their ambitions.

Throughout the deal we acted as strategic advisers to the AB InBev board, leading them through the legal challenges across the world and helping plan the strategy for negotiations with SABMiller.

These became particularly tense when, as completion drew near, the UK's Brexit vote led to a sharp decline in sterling that ultimately required AB InBev to increase its offer.

Opening up opportunities

The deal enabled AB InBev to establish itself as a genuinely global brewer and one of the world's biggest consumer products companies.

While it was already the no. 1 brewer by sales, AB InBev has now acquired valuable assets in key emerging regions with strong growth prospects such as Africa, Asia and Central and South America. It will be able to provide more choices for beer drinkers in new and existing markets.

This transformative transaction was executed in just 13 months. In the words of AB InBev itself, it was 'a world-class team and a world-class result'.