SABMiller abandons £614m fund-raising at eleventh hour

The brewer SABMiller, created by South African Breweries' purchase of Miller Brewing, was forced to shelve plans to raise about £614m for further acquisitions last night.

The company, run by the chief executive Graham Mackay, announced yesterday morning that it was offering about 120 million shares to institutional investors. But the move sent shares in the brewer down 26.5p, or 5 per cent, to close at 503.5p, making it one of the worst performing stocks in the FTSE 100 index. The price of the placing, which would have increased SABMiller's listed equity by up to 15 per cent, was due to be announced today.

SABMiller blamed poor market conditions for the decision to shelve the placing. "It appeared to us against this background that there wasn't the level of support to proceed with the placing," SABMiller's spokesman Nick Chaloner said.

He added that the company could still proceed with the fund-raising over the next 12 months and would be "watching the markets".

SABMiller had said the fund-raising would give it the flexibility to "to enhance its position as a global brewer" as the industry consolidates.But investors expressed concern at the speed of the brewer's expansion. Earlier this week, SAB completed its $5.4bn (£3.5bn) purchase of Miller Brewing from Philip Morris in a deal that gave the US group a 36 per cent stake in the renamed brewer.

Analysts had expected SABMiller to use the cash to fund acquisitions in emerging markets such as Central America, although some expressed concern that plans to tie up with Scottish & Newcastle could be revived.

Investec Securities' Anthony Geard said yesterday: "We are not inclined to give SAB the benefit of the doubt for another deal we weren't told about.... If SAB is going to launch a bid for S&N we would be very concerned."