Britain's SABMiller rejects new AB InBev bid in beer battle

British beer giant SABMiller rejected Wednesday an improved $103-billion takeover from Anheuser-Busch InBev, arguing it was too low, but a split emerged with top shareholder Altria.

AB InBev, the world's biggest brewer behind lager brands like Budweiser, Corona and Stella Artois, had earlier lodged its third offer worth £68 billion or 92 billion euros for the British maker of Foster's, Grolsch and Pilsner Urquell.

"The board of SABMiller has now met formally to consider the new proposal announced by AB InBev today," the company said in a brief statement rebutting the latest takeover tilt from the Belgian-Brazilian drinks firm.

"The board, excluding the directors nominated by Altria Group Inc., has unanimously rejected the £42.15 (per share) proposal as it still very substantially undervalues SABMiller, its unique and unmatched footprint, and its standalone prospects."

The latest offer was pitched at a premium of about 44 percent to SABMiller's closing share price of £29.34 on September 14, prior to the first offer.

And in a surprise twist, US tobacco giant Altria -- which owns 27 percent of SABMiller -- issued a separate statement urging the British group to agree terms.

"Altria believes that a combination of these two companies would create significant value for all SABMiller shareholders," said Altria, which produces Marlboro cigarettes.

"Altria urges SABMiller's board to engage promptly and constructively with AB InBev to agree on the terms of a recommended offer."

- Global megabrewer? -

A deal would create a global "megabrewer" worth about 220 billion euros ($250 billion).

SABMiller shares finished 0.30 percent higher at £36.33 in Wednesday trade, coming off early gains of about three percent after the revised offer was announced. InBev closed up 0.60 percent in Brussels.

AB InBev had earlier said it was disappointed that SABMiller had rejected its two previous lower-priced offers "without any meaningful engagement". It has yet to react to news of the third rejection.

However, the British group's chairmen Jan du Plessis issued a staunch defence of the brewer's prospects as an independent company.

"SABMiller is the crown jewel of the global brewing industry, uniquely positioned to continue to generate decades of standalone future volume and value growth for all SABMiller shareholders from highly attractive markets," he said.

"AB InBev needs SABMiller but has made opportunistic and highly conditional proposals, elements of which have been deliberately designed to be unattractive to many of our shareholders. AB InBev is very substantially undervaluing SABMiller."

For its part, InBev, which was formed in 2008 by the merger of InBev and US brewing giant Anheuser-Busch, described the proposed deal as fair.

"AB InBev believes the revised cash proposal of £42.15 per share is at a level that the board of SABMiller should recommend," it added in a statement.

With the takeover tussle already dragging on for weeks, analysts say InBev may have to increase its offer to around £45 a share to get the deal done at a time when the global players are looking to consolidate.

- 'Decade of consolidation' -

"We should not be surprised to see a slightly raised offer over the next week," Simon Davies of Canaccord Genuity in London said in a note.

The big brewers are looking for tie-ups to offset the inroads made by small independent brewers catering to local demand for craft beers and other less brand-heavy products.

SABMiller shareholders rejected two previous offers at £38 and then £40 and analysts said they may well do the same again.

The British brewer recalled when InBev had discussed offering £42 in talks last month, the board had concluded that it was too low, noting that the new proposal was only 15 pence higher.

Jeremy Cunnington at Euromonitor International added: "AB InBev's bid for SABMiller is the inevitable conclusion of over a decade of consolidation within the brewing industry.

"The completed deal will give AB InBev a 29 percent market share, which is a 20 percentage point lead over the next biggest brewer, Heineken."

Dutch beer titan Heineken said last month it was buying half of Lagunitas, the fifth-largest craft brewer in the United States.

And on Wednesday the Dutch group announced a deal worth 696 million euros ($780 million) with the world's biggest distiller, Diageo, to get a majority stake in Jamaica's Red Stripe brewer and Malaysia's GAB, maker of Tiger and Anchor beer.