By Martinne Geller and Philip Blenkinsop
LONDON/BRUSSELS (Reuters) - Anheuser-Busch InBev raised its proposed takeover offer for SABMiller on Monday, as the world's largest brewer tries to win over its smaller rival to the idea of creating a giant that would make nearly a third of the world's beer.
The maker of Budweiser and Stella Artois said it would offer 43.50 pounds per share in cash to most SABMiller shareholders, an improvement from the 42.15 pounds it put forward last week.
AB InBev has until 1600 GMT on Wednesday to launch a formal bid for SABMiller, which would rank as the biggest ever UK company takeover.
Monday's sweetened offer is the company's fourth, following rejections of cash offers at 38, 40 and 42.15 pounds per share.
Three of SAB's top 10 shareholders had spoken out in support of the board rejecting the previous offer, which SABMiller said "very substantially" undervalued the company.
SAB declined to comment on the new offer.
Shares of SAB, maker of beers including Peroni and Grolsch, were down nearly 1 percent at 1525 GMT at 36.39 pounds, as some investors worried the parties are still too far apart to agree to a deal.
"The last reaction from SAB was that the previous offer was significantly undervaluing it," said Morningstar analyst Phil Gorham. "The latest offer is not a significant improvement."
Tobacco group Altria Group, which owns about 27 percent of SABMiller, had already endorsed AB InBev's last offer, while the Santo Domingo family of Colombia, which owns about 14 percent, rejected it. Neither party was immediately available to comment on Monday's offer.
The acceptance by both parties of a lower-priced cash-and-share alternative is a precondition to a deal, and Monday's improved offer significantly improves the offer for them.
AB InBev raised the cash portion of the cash-and-share alternative to 3.56 pounds per share, up from 2.37 last week, an increase of 50 percent.
"It might get them to talk," said Exane BNP Paribas analyst Eamonn Ferry.
VERY CLOSE
The Colombian board members who voted against last week's offer are Alejandro Santo Domingo and Carlos Alejandro Perez Davila, cousins who also run New York-based Quadrant Capital Advisors.
Yet Alejandro Santo Domingo, a Harvard-educated fixture of New York high society, is, according to media reports, well-acquainted with AB InBev's controlling shareholders, including Brazilian billionaire Jorge Paulo Lemann.
"We think the Colombians are very close to Lemann and that Lemann knows exactly what price the Colombians want," said an SAB shareholder with a less than 1 percent stake.
The cash-and-share alternative is meant to be unattractive for institutional shareholders. It was designed "for and with" Altria and the Santo Domingos, who would have to pay large capital gains taxes on cash proceeds.
Taking into account the discounted price of the share alternative, the new offer would involve AB InBev paying roughly 67 billion pounds ($103 billion). The previous offer would have seen the company pay 65 billion pounds ($100 billion).
The SAB shareholder, who was not authorized to speak to the press, said he could see merits in a merger and hoped discussions would continue.
"It makes so much sense to put these two businesses together, but they clearly have to negotiate and get the best price," the shareholder said.
Yet for AB InBev shareholders, the higher offer means less future upside if the deal goes through. "It's obviously less attractive than it was and leaves less scope for error," said one analyst.
AB InBev shares were up 0.3 percent at 98.6 euros.
($1 = 13.3080 rand)
($1 = 0.6508 pounds)
(Additional reporting by Tiisetso Motsoeneng in Johannesburg; Editing by Mark Potter and David Holmes)
