By Martinne Geller
LONDON (Reuters) - SABMiller (L:SAB) has told employees to pause the integration of its operations with those of Anheuser-Busch InBev (BR:ABI) as the brewer's board weighs its sweetened takeover offer, two sources familiar with the matter said.
The pause is not an indication of the board's thinking, said one of the sources, who declined to be identified as the matter is private.
Still, AB InBev's U.S.-listed shares fell 3 percent and shares of Molson Coors (N:TAP), which is set to take over SAB's U.S. operations, fell 5 percent on concerns about the fate of the $100 billion-plus deal, one of the biggest in corporate history.
The world's top brewers agreed to merge late last year and for months have been engaged in back-office preparations, the sources said, aimed at smoothing the combination that was expected to start in the second half of the year when the deal was due to close.
The deal, however, has hit the rocks in recent weeks amid investor dissent over an offer made less attractive by a sharp fall in the pound following Britain's vote to leave the European Union.
In an effort to calm a stream of investor complaints, AB InBev sweetened its offer on Tuesday.
That prompted SABMiller Chief Executive Alan Clark to call for a pause in "convergence planning workstreams," according to a company memo published on Wednesday by the Financial Times' blog Alphaville.
"There should be no contact with AB InBev with immediate effect, and all meetings and calls will be postponed until further notice," the memo said, noting that it also applied to brewers Molson Coors and Asahi (T:2502), which are picking up assets that need to be divested in the deal, and all advisers and consultants.
"This is another big piece of news to take in and I appreciate this will cause lots of internal and external speculation. However, please stay focused and I will keep you updated as soon as I am able to," Clark added.
SAB officials declined to comment on the memo or the pause in integration, which was mentioned earlier on Wednesday by trade publication Beer Business Daily.
Denver-based Molson Coors, which on Monday announced leadership changes to take effect once the deal closes, also declined to comment, as did AB InBev.
MIXED RECEPTION
AB InBev's new offer is worth around 79 billion pounds, up from a November deal worth about 70 billion pounds. The steep weakening of the pound versus the dollar had reduced the value of that offer for U.S. investors, while a rise in AB InBev shares has increased the value of a special cash-and-share alternative aimed at SAB's two largest shareholders.
The new offer, which is final, has met a mixed reception.
Top 10 shareholder Aberdeen Asset Management (L:ADN) said the offer remained "unacceptable" as it undervalued the company and continued to favor those two major shareholders, cigarette maker Altria (N:MO) and Colombia's Santo Domingo family.
By contrast, New York-based hedge fund Twin Capital Management, also a shareholder, applauded the raised offer.
"I'm hopeful it gets done. It should get done," Twin's CEO David Simon told Reuters, adding that he had conveyed that message to SABMiller management.
South Africa's Public Investment Corporation (PIC), a top five shareholder, told Reuters it was in talks with SAB over the revised offer, but declined to make its view public.
Following discussions with shareholders, SAB's board plans to meet to formally review the new offer.