Shareholders Can Stay Vested As SABMiller Exits Johannesburg Stock Exchange

Shareholders Can Stay Vested As SABMiller Exits Johannesburg Stock Exchange

SABMiller shareholders on Wednesday approved a $104-billion merger with Anheuser-Busch InBev, making way for one of the largest-ever proposed mergers in history.

London-based SABMiller, which was first listed on the Johannesburg Stock Exchange in 1897, will be delisted on Monday. However SABMiller shareholders can remain vested in the global beer industry by buying into AB InBev.

News of a possible merger rattled South African investors when it was first announced. They worried that their homegrown corporate giant might be leaving South Africa for good. An AB InBev spokesman said any company resulting from an acquisition of SABMiller would retain a secondary listing on the Johannesburg Stock Exchange,Wall Street Journal reported in October 2015.

The merger will not only change the landscape of the South African beer industry, but is also expected to affect trading patterns on the JSE, Business Day Live reported.

Belgian-Brazilian-American Anheuser-Busch InBev is the world’s largest brewer by revenues. SABMiller is No. 2. SAB is also a major bottler of Coca-Cola, and dates its origins back to South African Breweries, founded in 1895. The company’s operations were mainly limited to southern Africa during apartheid. In 1990 it began investing in Europe.

With SABMiller gone from the Financial Times Stock Exchange/JSE top 40 index, where it had a weighting of 13 percent, Impala Platinum, which has a market cap of 49.6 billion rand, will make it onto the list with a weighting of 0.75 percent, Business Day Live reported.

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Implats (Impala Platinum’s) share price has risen nearly fourfold in 2016, ENCA reported.

The reshuffle will also see food producer AVI replace SABMiller on the industrial-25 index‚ which constitutes the biggest component on the all-share index,  The index attracts investment by tracker funds. Sibanye Gold and Gold Fields were included in the index earlier in September.

Index trackers will have to offload their SABMiller shares during trading today and replace them with other top 40 components such as Naspers and Richemont, which will have higher weightings in the index, Business Day Live reported.

SABMiller shareholders, who will receive their cash between Oct. 11 and Oct. 13, can remain invested in the global beer industry by buying into AB InBev, according to BDLive:

Leanne Parsons, director of information services at the JSE, said the top 40 is ranked in terms of a new methodology, which requires the component companies to have a certain free float of South African shareholders.

The new methodology combines market cap and investable market cap.

Ahead of the completion of the merger, AB InBev had too few South Africans on its shareholder register and therefore its investable market cap was not large enough to make it into the top 40 index.

The South African register is expected to increase before the end of October when the JSE begins its quarterly review of the index components.

AB InBev, which has a market cap of 2.9-trillion rand, is in the all share index.

AB InBev will keep its existing name after the merger, Eyewitness News reported.

The brewer of Budweiser, Corona and Stella Artois has undergone several name changes. After a 2004 merger with Brazil-based AmBev, it changed from Interbrew to InBev. After its 2008 purchase of Budweiser-maker Anheuser Busch, it took its current name.

The deal will create the first global brewer with new fast-growing African and Latin American markets, AB InBev CEO Carlos Brito said. He will head the merged company.