Anheuser-Busch InBev (AB InBev) recently made an offer to obtain the total issued share capital of SABMiller (SAB). The offer was accepted by SAB after the boards of both companies agreed on the terms of the proposed transaction. The transaction will have a direct impact on SAB shareholders and therefore shareholders’ attention is drawn to the details of the transaction as briefly explained below.
Current SAB shareholders can exercise either of two options:
- Firstly, the option to receive a cash payment of £44 for each SAB share in a direct sale transaction.
- Secondly, the option to choose a partial share alternative (PSA) in terms of which the shareholder will receive a cash payment of £3.7788 for each SAB share as well as 0.483969 limited shares in a new listed holding company (NewCo).
- 2.1 A shareholder may only exercise this option in proportion to the shareholder’s total interest in SAB and therefore, for example, the shareholder cannot choose to exercise Option 2 in relation to only 50% of the shareholder’s interest.
- 2.2 Option 2 is restricted to the issue of 326 million limited shares and cash payment not exceeding £2,545 million. This implies that only 41.6% of current SAB shareholders can be accommodated, if it is assumed that all SAB shareholders exercise Option 2. In the event of an oversubscription with regard to Option 2 the limited shares and cash will be allocated proportionately to shareholders in relation to the extent of such subscription to Option 2. Altria Group Inc. en BEVCO Ltd, SAB’s largest shareholders have already irrevocably undertaken to subscribe to the PSA regarding their interests that comprise approximately 40.45% of SAB’s total share capital.
- 2.3 The limited shares will not be listed and traded for a period of five years after which, if the shareholder so chooses, the shares can be switched to New Ordinary Shares in NewCo on a one-to-one basis. The shares will then be held on equal terms with the New Ordinary Shares with reference to the dividends and voting rights linked to them.
At this stage the time frame for the above events is still uncertain but it is expected that the transactions will be finalised in the second half of 2016.
It should be noted that exercising of either option will lead to liability for capital gains tax for the current SAB shareholder.
SAB shareholders should give thorough consideration to the investment and tax consequences of the two options. The payment of the capital gains tax can, for example, be postponed by utilising the corporate tax relief measure in terms of article 42 of the Income Tax Act, by exchanging the SAB shares for units in a unit trust.
Please contact your financial adviser should you require more information from an investment perspective in order to make a choice between the two available options.
You are welcome to contact your relationship director or Pieter Aucamp at firstname.lastname@example.org if you have any enquiries with regard to the taxation consequences of your choice of option, or possibilities to limit or postpone the tax liability.