Financial market research and analysis

The third time is apparently not the charm in the case of AB’s bid for SAB Miller.

The latest revised offer would value SABMiller at nearly $104 billion. Anheuser-Busch InBev said it had offered, in two written, private proposals, to pay £38 a share and later £40 a share in cash.

The fact that SAB posted its trading update a week early indicates that it plans to play hardball. Growth in Latin America and of course Africa was decent and this is ultimately what Anheuser-Busch InBev wants to tap into.

There are now 7 days until the ‘put-up-or-shut-up” pretakeover grace period expires. The deal, if it goes through, will create a combined company with $64 billion in annual revenue that commands 30 percent of global beer sales, according to the research firm Euromonitor International. But even if AB was to up the ante and perhaps elevate its number to say £42 per share there is still the matter of winning approval from the US Justice Department and regulators in Europe and China, the companies would almost certainly have to sell some brands or assets, including SABMiller’s 58 percent stake in its Miller Coors joint venture with Molson Coors Brewing Company in the United States, and its share of the CR Snow joint venture that owns Snow, China’s best-selling beer brand.

Thus it will not necessarily be the case that the share price will run up to the bid price immediately, should AB make another offer.

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Since rising over 22% on the initial bid news from 3035p to 3640p, the price has made an attempt at the 3800p zone, previous resistance point (6/3/15 and 12/9/14).

Last week’s candlestick was a spinning top (with a large price range testing the resistance but still representing indecision)  should we end this week at present levels (3653p) or even sub 3600p (confirmation) it would indicate that the downside may well prevail.

Near term support lies at the 200DMA 3454p (38.2% Fib 2773/3884p) ( a daily close below the 3600p would be needed to precipitate this.

Certainly while there still remains potential for a deal, shorting this stock would be foolhardy but all bets are off after the 14/10.

The market (and most likely SAB) are seeking a price around £45 per share – should that materialise then we can likely expect to see the overhead resistance give way to upside momentum.