By John Colley, Professor of Practice at Warwick Business School

Whilst SABMiller’s activist shareholders attempt to hold out for a further increase in AB InBev’s cash alternative, do they really have a viable alternative? If the deal collapses their share price goes with it.

The current cash offer level of £45 is not going to be seen again for many years. The business has been in paralysis over the last nine months and the main parts have been hawked around their competitors. The staff have suffered continuing uncertainty about their futures, and competitors will have approached the customers. Many of the staff may have been preparing for their new owners.

SAB MillerBusiness performance has been faltering, particularly in Africa. Technical factors such as currency apart, the SABMiller business is probably worth less now than before the bid when it was priced at £29.

As for AB InBev, how far will they go? The deal is looking a disappointment to them and they are putting a brave face on it. Competition authority demands mean they have had to sell all of SABMiller in Europe, which is worse than expected. Pilsner Urquell and the Eastern Europe brands are having to be sold as well as Grolsch and Peroni. In the USA, all SABMiller’s activities are being sold to Molson Coors, plus demanding restrictions are being placed on the nature of deals AB InBev can do with distributors.

AB InBev is also blocked from buying more distributors and craft brewers without specific Department of Justice agreement. The US situation now is worse than before they made the bid. In China, Snow beer is being sold to China Resource Enterprise, the government-owned partner, in an attempt to gain competition clearance. SABMiller’s shareholders will get the opportunity to vote on the deal once the Chinese competition authorities have delivered their verdict.

Total proceeds from the forced divestments are to be around $20Bn leaving a price tag of $86Bn for SABMiller’s African and Latin American businesses. This is looking very expensive indeed. No wonder AB InBev will not raise the cash alternative further. Perhaps they have reached the point of ambivalence.

SABMiller shareholders beware: this may be the end of the line.