Newspaper article International New York Times

SABMiller Plans More Cost Savings in Takeover Defense

Newspaper article International New York Times

SABMiller Plans More Cost Savings in Takeover Defense

Article excerpt

The brewer of Miller Lite and Peroni aims to convince investors it should stay independent as it fends off bids from Anheuser-Busch InBev.

SABMiller raised its annual cost-savings target by $550 million on Friday as it tried to convince shareholders that it would be better off remaining as a stand-alone company.

SABMiller, the brewer of Miller Lite and Peroni Nastro Azzurro, has rejected three takeover approaches from its global rival Anheuser-Busch InBev in recent weeks. SABMiller has said that the unsolicited proposals have substantially undervalued the company, "its unique and unmatched footprint and its stand-alone prospects."

The announcement of higher cost-cutting ambitions on Friday was the latest salvo in an increasingly contentious back-and-forth between SABMiller and Anheuser-Busch InBev, the world's largest brewer.

SABMiller said it expected to cut its annual costs by at least $1.05 billion by March 2020, after originally setting a target of cutting costs by $500 million by March 2018.

On Thursday, Anheuser-Busch said it was "surprised" that SABMiller's board still believed the latest takeover offer undervalued the company and said the claim "lacks credibility."

Under British takeover rules, Anheuser-Busch has until Wednesday to make what is considered a formal offer for SABMiller or walk away for up to six months. Under British law, the proposals so far have not been considered formal offers.

On Friday, SABMiller said that about 70 percent of the anticipated cost savings were expected to come from its procurement operations and that the remaining 30 percent would come from its manufacturing and distribution arms.

"The measures we are announcing today are a continuation of our existing cost-saving program," Alan Clark, the company's chief executive, said in a news release.

"We are continuing to remove duplication across markets, bringing specialist expertise in areas like procurement under one roof, and standardizing common processes," he added. "It results in our markets being freed up to concentrate on what they do best -- growing revenue with local consumers and customers. …

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