InBev Proposes Combination with SABMiller

Anheuser-Busch InBev (“AB InBev”) (Euronext: ABI) (NYSE: BUD) today announces a revised proposal to the Board of SABMiller plc (“SABMiller”) (LSE: SAB) (JSE: SAB) to combine the two companies and build the first truly global beer company.

Revised Proposal is Highly Attractive to SABMiller Shareholders

The revised proposal that AB InBev has made today is to acquire SABMiller for GBP 42.15 per share in cash, with a partial share alternative available for approximately 41% of the SABMiller shares. AB InBev has made two prior written proposals in private to SABMiller, the first at GBP 38.00 per share in cash and the second at GBP 40.00 per share in cash. AB InBev is disappointed that the Board of SABMiller has rejected both of these prior approaches without any meaningful engagement.

AB InBev believes that this revised proposal should be highly attractive to SABMiller shareholders and provides an extremely compelling opportunity for them. The cash proposal represents a premium of approximately 44% to SABMiller’s closing share price of GBP 29.34 on 14 September 2015 (being the last business day prior to renewed speculation of an approach from AB InBev).

The revised proposal is designed to enable a compelling cash offer to be made to SABMiller’s public shareholders and to provide a continuing attractive investment for Altria Group, Inc. and BevCo Ltd. (who together hold approximately 41% of the SABMiller shares), which AB InBev believes will satisfy their financial requirements. Importantly, the partial share alternative enables appropriate financing to be achieved and supports the cash offer at a higher price than AB InBev would otherwise be able to offer. Further details of the partial share alternative and the pre-conditions to this revised proposal are set out below.

AB InBev believes that the revised cash proposal of GBP 42.15 per share is at a level that the Board of SABMiller should recommend.

A Compelling Opportunity

The combination of AB InBev and SABMiller would result in a truly global brewer that would take its place as one of the world’s leading consumer products companies. Given the largely complementary geographical footprints and brand portfolios of AB InBev and SABMiller, the combined group would have operations in virtually every major beer market, including key emerging regions with strong growth prospects such as AfricaAsia, and Central and South America.

As a combined company, the group would generate revenues of USD 64 billion and EBITDA of USD 24 billion1. AB InBev believes that this transaction would be in the best interests of both companies’ consumers, shareholders, employees, wholesalers, business partners and the communities they serve.

“We have the highest respect for SABMiller, its employees and its leadership, and believe that a combination of our two great companies would build the first truly global beer company,” said Carlos Brito, Chief Executive Officer of Anheuser-Busch InBev. “Both companies have deep roots in some of the most historic beer cultures around the world and share a strong passion for brewing as well as a deep seated tradition of quality. By bringing together our rich heritage, brands and people we would provide more opportunities for consumers to taste and enjoy the world’s best beers. We also both strive to have a positive impact on the communities in which we work and live as two of the world’s leading corporate citizens. Put simply, we believe we can achieve more together than each of us could separately, bringing more beers to more people and enhancing value for all of our stakeholders.”

Combination to Generate Significant Growth Opportunities, Benefiting Stakeholders around the World

A combination of AB InBev and SABMiller would generate significant growth opportunities from marketing the companies’ combined brand portfolio through a largely complementary distribution network, and applying the best practices of both companies across the new organization. Strong brand building experience and success in developing national icons and local brands have been critical success factors for both AB InBev and SABMiller.

The combined company’s joint portfolio of complementary global and local brands would provide more choices for beer drinkers in new and existing markets around the world. In addition, bringing together the capabilities of both companies would enable further innovations to introduce exciting new products for our consumers around the globe.

As an example, following the combination with Anheuser-Busch, AB InBev has successfully grown Budweiser globally, with international sales now accounting for over half of the brand’s total volume.

Building the Best Global Talent Pool

AB InBev believes that, together with SABMiller, it can build one of the world’s pre-eminent consumer goods companies, benefitting from the skills, enthusiasm, commitment, energy and drive of the combined global talent base.

AB InBev is a truly international organization, with close to 30 nationalities represented in the most senior management positions. SABMiller’s experienced management team offers extensive market expertise, especially in regions where AB InBev does not currently have a significant presence.

As a result, AB InBev would expect that key members of SABMiller’s management team and employees would play a significant role in the combined company across the organization.

African Continent to be Critical Driver of Growth for Combined Company, Building on the Strong Heritage of SABMiller in the Region

Africa, as a continent, has hugely attractive markets with increasing GDPs, a growing middle class and expanding economic opportunities. Africa would continue to play a vital role in the future of the combined company, building upon the strong history and success of SABMiller in the region dating back to the 19th century. AB InBev intends to establish a secondary listing on the Johannesburg Stock Exchange, as well as have a local board that would be critical to the future success of the combined company.

AB InBev intends for Johannesburg to continue to be the regional headquarters for the combined group on the African continent. In addition, AB InBev recognizes that SABMiller has long supported the progress of South African society and is deeply engaged with local stakeholders.  In particular, AB InBev admires the Broad-Based Black Economic Empowerment scheme that SABMiller has put in place and intends to continue this initiative.

Building a Better World Together

Both companies strive to have a positive impact on the communities in which they work and live by providing opportunities all along the supply chain — from farmers to brewmasters to truck drivers to customers — as well as by aspiring to the highest standards of corporate social responsibility.

A combination of the two companies would pool resources and expertise to make a greater and more positive impact on the world. Both companies have strong programs that partner with stakeholders to encourage the responsible enjoyment of their products, to reduce the impact on the environment with a focus on water, energy, and recycling, and to improve the communities where they live and work.

Proven Track Record of Successfully Completing Transactions and Creating Shareholder Value

AB InBev has a proven track record of successfully completing and integrating business combinations and creating shareholder value. The company has completed several major transactions in the past two decades and has consistently delivered on stated goals and honored commitments for the benefit of all stakeholders. A combination would pool resources and expertise to make an even greater and more positive impact on communities around the world.

Committed to Working Proactively with Regulators

The companies’ geographic footprints are largely complementary on a continental and regional basis and AB InBev would work with SABMiller and the relevant authorities in seeking to bring all potential regulatory reviews to a timely and appropriate resolution. In the U.S. and China, in particular, the company would seek to resolve any regulatory or contractual considerations promptly and proactively. Similarly, in South Africa and other jurisdictions, AB InBev would work with SABMiller to address any regulatory requirements.

Partial Share Alternative

The revised proposal includes a partial share alternative which comprises up to 326 million shares and is available for approximately 41% of the SABMiller shares. These shares would take the form of a separate class of AB InBev shares (the “Restricted Shares”) with the following characteristics:

  • Unlisted and not admitted to trading on any stock exchange;
  • Subject to a five-year lock-up from closing;
  • Convertible into AB InBev ordinary shares on a one for one basis after the end of that five year period; and
  • Ranking equally with AB InBev ordinary shares with regards to dividends and voting rights.

Pre-conversion into AB InBev ordinary shares, SABMiller shareholders who elect for the partial share alternative will hold 0.483969 Restricted Shares for every 1 SABMiller share2. SABMiller shareholders who elect for the partial share alternative would also receive GBP 2.37 in cash for each SABMiller share. Based on the closing price of AB InBev’s ordinary shares on 6 October 2015 of EUR 98.06, the partial share alternative, including the GBP 2.37 in cash, would value each SABMiller share at GBP 37.49 per share, representing a premium of approximately 28% to the closing SABMiller share price of GBP 29.34 as of 14 September 20153.

This means that the implied value of the partial share alternative is less than the proposed cash offer, even before taking account of the additional discount that would apply for the unlisted nature and non-transferability of the Restricted Shares.  AB InBev is not seeking a recommendation from the Board of SABMiller in respect of the partial share alternative.

AB InBev expects that most SABMiller shareholders will likely accept the higher premium cash offer and, should they wish to, re-invest their proceeds in AB InBev’s listed ordinary shares. However, any SABMiller shareholder will be able to elect for the partial share alternative.


The announcement of a formal transaction would be subject to the following matters:

  • Recommendation by the Board of SABMiller in respect of the cash offer, and the execution of irrevocable undertakings to vote in favor of the transaction from members of the SABMiller Board, in a form acceptable to AB InBev;
  • The execution of irrevocable undertakings to vote in favor of the transaction and the elections for the partial share alternative from SABMiller’s two major shareholders, Altria Group, Inc. and BevCo Ltd., in each case in respect of all of their shareholding and in a form acceptable to AB InBev;
  • Satisfactory completion of customary due diligence; and
  • Final approval by the Board of AB InBev. The Board of AB InBev has fully supported this proposal and expects (subject to the matters above) to give its formal approval immediately prior to announcement.

AB InBev reserves the right to waive in whole or in part any of the pre-conditions to making an offer set out in this announcement.

The conditions of the transaction will be customary for a combination of this nature, and will include approval by both companies’ shareholders and receipt, on satisfactory terms, of all antitrust and regulatory approvals.

In view of the timetable for obtaining some of these approvals, AB InBev envisages proceeding by way of a pre-conditional transaction in accordance with The City Code on Takeovers and Mergers (“the Code”).

The cash consideration under the transaction would be financed through a combination of AB InBev’s internal financial resources and new third party debt.

The proposal does not constitute an offer or impose any obligation on AB InBev to make an offer, nor does it evidence a firm intention to make an offer within the meaning of the Code. AB InBev does not, therefore, regard it as forming the basis for an announcement pursuant to Rule 2.2(a) of the Code.

There can be no certainty that a formal offer will be made.  A further statement will be made as appropriate.

AB InBev reserves the following rights:

a)         to introduce other forms of consideration and/or to vary the composition of consideration;

b)         to implement the transaction through or together with a subsidiary of AB InBev or a company which will become a subsidiary of AB InBev;

c)         to make an offer (including the cash offer and partial share alternative) for SABMiller at any time on less favorable terms:

(i)         with the agreement or recommendation of the Board of SABMiller;

(ii)        if a third party announces a firm intention to make an offer for SABMiller on less favorable terms; or

(iii)       following the announcement by SABMiller of a whitewash transaction pursuant to the Code; and

d)         in the event that any dividend is announced, declared, made or paid by SABMiller, to reduce its offer (including the cash offer and partial share alternative) by the amount of such dividend.

AB InBev has retained Lazard as its financial advisor and Freshfields Bruckhaus Deringer LLP as legal advisor in connection with the matters described in this announcement.

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