AB InBev’s R1.47trn takeover bid for SABMiller was thrown into disarray after the target company suspended integration of the two brewers following a rebellion from shareholders who say they haven’t been compensated enough for the pound’s recent plunge.

SABMiller managers asked employees to halt work knitting together the two companies, with CEO Alan Clark saying in an internal memo that “there should be no contact with AB InBev with immediate effect.”

Advisers continue to work on the transaction, and SABMiller’s board hasn’t decided to walk away from the deal as it reviews an improved offer from AB InBev, people familiar with the matter said. The brewers declined to comment on the memo reviewed by Bloomberg News.

What looked like a done deal just weeks ago has morphed into a battle pitting the world’s biggest brewer against SAB investors who oppose terms they say withered since the UK voted last month to leave the European Union.

While AB InBev nudged up its bid on Tuesday, some shareholders remain opposed - raising further questions over completion of an industry-transforming transaction affecting companies from the US to Africa to Asia.

“It suggests that they think that the risk is real that shareholders won’t approve this,” said Philip Gorham, an analyst at Morningstar. “We don’t know at this stage if the deal will close. It’s an unexpected wrinkle.”

According to the memo, so-called convergence planning is on hold, and all meetings and calls between the companies should be postponed until further notice while management reviews the latest proposal. According to the memo, the same applies to contact with representatives of Asahi  and Molson Coors Brewing, both of which are buying assets from the brewers as part of the deal.

By close of trade on the JSE on Wednesday, AB InBev was down 3% to R1 777 and SABMiller was down 2% at R816. 

Two-pronged plan

Asahi will closely monitor developments as its €2.55bn purchase of Peroni, Grolsch and Meantime beer brands in Europe from AB InBev is subject to completion of the deal between AB InBev and SABMiller, Takuo Soga, a Tokyo-based spokesperson for the Japanese brewer said by phone Thursday. Asahi has no plans to review its own deal at the moment, he said.

Representatives for China Resources Beer, which plans to raise HK$9.5bn (R17bn) in a Hong Kong share sale to help finance the purchase of the remaining stake in a Chinese venture with SABMiller, did not immediately respond to requests for comment.

At the heart of the confrontation is a complex two-pronged takeover proposal designed to please both small and institutional investors as well as SAB’s two biggest stakeholders, Altria and Bevco. Those two parties were granted a cash-and-stock option, whose value has soared from £39 when the deal was announced last year to about £50, while the all-cash bid hasn’t benefited as much.

AB InBev sought to address the mismatch on Tuesday by raising the cash bid to £45 a share, £1 more than the prior offer. It also increased the amount of cash in a cash-and-stock alternative.

Still, some shareholders remain on collision course. SABMiller holder Aberdeen Asset Management said even the revised proposal undervalues the company and is unacceptable because stockholders are receiving different treatment. All told, the bid is valued at £79bn, making it the biggest takeover approach in the brewing industry.

AB InBev’s bid has already received regulatory clearance from South Africa and the US in recent weeks. Part of the approval process includes a complex set of divestments around the globe to appease regulatory concern. Molson Coors is set to acquire SABMiller’s stake in the MillerCoors brewing venture and is still awaiting approval from Chinese regulators.

Molson shares

The revelation of the suspended integration sent Molson down as much as 8.9% in US trading. Both AB InBev and SABMiller had closed in Europe when the memo become public. SABMiller’s American depository receipts fell as much as 4.6%.

SABMiller said on Tuesday that its board would consult shareholders about AB InBev’s new offer and make an announcement thereafter. Altria and Molson Coors declined to comment.

The deal to merge SABMiller and AB InBev, termed “Megabrew” by analysts, would create a behemoth controlling about half of the industry’s profits. The combined company will have the No. 1 or No. 2 positions in almost all of the world’s biggest beer markets, and provide AB InBev its first toehold in Africa, where about 65 million people are due to reach the legal drinking age by 2023.

The UK’s decision to leave the European Union, following a popular referendum last month, has sent shock waves through the European corporate landscape.

Companies ranging from Siemens to luxury-goods maker Burberry have put future investments under review, and consumer-facing corporations including low-cost airline EasyJet have said the vote has increased uncertainty as the UK embarks on the arduous process of uncoupling from decades of political and economic entanglement with the European bureaucracy.