SABMiller (SAB) £39.28

Gain to date: 13.2%

Original entry price: £34.70, 4 Dec 2014

We’re delighted our bullish call on Pilsner Urquell-to-Grolsch maker SABMiller (SAB) is now 13.2% in the money, the shares frothing up to £39.28 after the beer brewer agreed (13 Oct) ‘in principle’ to AB InBev’s (BUD:NYSE) fourth takeover proposal.

Pitched at a 50% premium to SABMiller’s undisturbed share price, the Stella Artois-to-Budweiser making colossus’ informal offer would entitle SABMiller shareholders to £44 per share in cash; there’s also a partial share alternative for 41% of the equity, a move designed to win over SABMiller’s major shareholders including US cigarette maker Altria (MO:NYSE) and BevCo, the Santo Domingo family’s holding company.

The fact SAB’s share price trades well below the £44 proposal indicates some doubts this mega-deal, which faces competition hurdles, will go through - the deadline for a formal agreement is pushed back to 28 October. However with SABMiller indicating it would be ‘prepared unanimously to recommend the all-cash offer’ and our readers looking at a bumper 26.8% profit if the historic takeover proceeds, we leave our buy call running.

We are minded to leave our ‘buy’ call running, given upside to come from the mooted takeout price. (JC)