The Boards of Anheuser-Busch InBev SA/NV (“AB InBev”) and SAB Miller plc (“SABMiller”) are pleased to announce that they have reached agreement on the terms of a recommended acquisition of the entire issued and to be issued share capital of SABMiller by AB InBev.
• The Transaction will be implemented by means of the acquisition of SABMiller by Newco (a Belgian company to be formed for the purposes of the Transaction). AB InBev will also merge into Newco so that, following completion of the Transaction, Newco will be the new holding company for the Combined Group.
• Pursuant to the terms of the Transaction, each SABMiller Shareholder will be entitled to receive:
For each SABMiller Share: £44.00 in cash (the “Cash Consideration”)
• The Cash Consideration represents:
o a premium of approximately 50% to SABMiller’s closing share price of £29.34 on 14 September 2015 (being the last Business Day prior to renewed speculation of an approach from AB InBev); and
o a premium of approximately 36% to SABMiller’s three month volume weighted average share price of £32.31 to 14 September 2015.
• The Transaction will also include a Partial Share Alternative under which SABMiller Shareholders can elect to receive:
For each SABMiller Share: £3.7788 in cash and 0.483969 Restricted Shares in lieu of the full cash consideration to which they would otherwise be entitled under the Transaction (subject to scaling back in accordance with the terms of the Partial Share Alternative). The Partial Share Alternative is equivalent to a value of £41.85 per SABMiller Share on 10 November 2015. The stated value of the Partial Share Alternative is calculated before taking account of any discount for the unlisted nature of the Restricted Shares.
• The Partial Share Alternative represents, as at 10 November 2015:
o a premium of approximately 43% to SABMiller’s closing share price of £29.34 on 14 September 2015 (being the last Business Day prior to renewed speculation of an approach from AB InBev); and
o a premium of approximately 30% to SABMiller’s three month volume weighted average share price of £32.31 to 14 September 2015.
• The Transaction values SABMiller’s entire issued and to be issued share capital at approximately £71 billion, as at 10 November 2015.
• SABMiller Shareholders will only be able to elect for the Partial Share Alternative in relation to their entire holding of SABMiller Shares and not part only. The Partial Share Alternative is limited to a maximum of 326,000,000 Restricted Shares and £2,545,387,824 in cash, which will be available for approximately 41.6% of the SABMiller Shares. To the extent that elections for the Partial Share Alternative cannot be satisfied in full, they will be scaled back pro rata to the size of such elections (or as near thereto as AB InBev in its absolute discretion considers practicable) and the balance of the consideration due to SABMiller Shareholders who have made such elections will be satisfied in cash in accordance with the terms of the Transaction.
• The Restricted Shares will be unlisted, not admitted to trading on any stock exchange, not capable of being deposited in an ADR programme and will be subject to, among other things, restrictions on transfer until converted into New Ordinary Shares. The Restricted Shares will be convertible at the election of the holder into New Ordinary Shares on a one- for-one basis with effect from the fifth anniversary of Completion. From Completion, such Restricted Shares will rank equally with the New Ordinary Shares as regards dividends and voting rights. Further details on Newco and the rights attaching to the Restricted Shares are set out in paragraph 10 and Appendix 6 to this Announcement.
• Under the terms of the Transaction, AB InBev has agreed that SABMiller Shareholders will be entitled to receive any dividends announced, declared or paid by SABMiller, in each case in the ordinary course (including on usual biannual declaration, record and payment dates) in respect of any completed six-month period ending 30 September or 31 March prior to Completion of the Transaction, subject to and on the terms set out in paragraph 17 of this Announcement. Such dividends shall not exceed:
(i) US$0.2825 per SABMiller Share for the six month period ended 30 September 2015 and a further US$0.9375 per SABMiller Share for the six month period ending 31 March 2016 (totalling US$1.22 per SABMiller Share); and
(ii) in respect of any subsequent six month period ending 30 September or 31 March, an amount representing the same ratio of the amount of the dividend per SABMiller Share to adjusted earnings per SABMiller Share for the relevant six month period as compared to the ratio for the relevant six month period ended 30 September 2015 or 31 March 2016, respectively,
without any consequential reduction in the Consideration in respect of each SABMiller Share payable under the Transaction, on the terms set out in paragraph 17 of this Announcement. If any dividend or other distribution is announced, declared, made or paid in respect of the SABMiller Shares on or after the date of this Announcement and prior to Completion, other than a Permitted Dividend, or in excess of the Permitted Dividends, AB InBev reserves the right to reduce the Consideration in respect of each SABMiller Share by an amount equivalent to all or part of any such excess, in the case of the Permitted Dividends, or otherwise by the amount of all or part of any such dividend or other distribution. For the avoidance of doubt, if Completion occurs after the announcement or declaration of a Permitted Dividend but before its payment date, SABMiller Shareholders will not be entitled to receive such dividend.
• The Cash Consideration and the cash element of the Partial Share Alternative are priced in pounds sterling. However, SABMiller Shareholders on the South African register will, as required, receive any cash consideration due to them under the terms of the Transaction in South African Rand. The Transaction Documents will include further details in relation to this currency exchange.
• AB InBev intends to seek a secondary (inward) listing of its ordinary shares on the JSE as soon as reasonably practicable after the date of this Announcement.
• Upon or shortly after Completion, the New Ordinary Shares will be listed on Euronext Brussels and it is also intended that they will, at the same time, be listed on the JSE and Mexico Stock Exchange and that American Depositary Shares (each representing a fixed ratio of New Ordinary Shares) will be listed on the NYSE.
• AB InBev believes the Transaction to be attractive to both companies’ shareholders, providing an extremely compelling opportunity for them.
• AB InBev believes the Transaction would create a truly global brewer, drawing on a similar heritage and shared passion for brewing and commitment to quality.
• 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, and provide more choices for beer drinkers, including global and local brands, in new and existing markets around the world.
• The Transaction would strengthen AB InBev’s position in key emerging regions with strong growth prospects such as Asia, Central and South America, and Africa. These regions have
hugely attractive markets and will be critically important to the future success of the Combined Group.
• AB InBev believes that by combining 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 believes that by pooling its resources and expertise, the Combined Group would also make a greater and more positive impact on the communities in which we live and work, by providing opportunities all along the supply chain and aspiring to the highest standards of corporate social responsibility.
• In short, AB InBev believes that more can be achieved together than apart.
• On 9 October 2015, SABMiller announced that it had increased its target annual run rate cost savings from its cost and efficiency programme announced in May 2014, from US$500 million by 31 March 2018 to at least US$1,050 million by 31 March 2020. The programme delivered US$221 million of annualised savings in its first year to 31 March 2015, and is expected to deliver in excess of US$430 million of annualised savings in its second year to 31 March 2016.
• The AB InBev Directors, having reviewed and analysed the potential benefits of the Transaction, based on their experience of operating in the sector and taking into account the factors that the AB InBev Group can influence, believe that the Combined Group will be able to achieve incremental recurring run rate pre-tax cost synergies of at least US$1.4 billion per annum. These synergies are expected to arise as a direct result of the Transaction and could not be achieved independently of the Transaction.
• The AB InBev Directors expect these synergies to be phased in over four years following Completion and to reach a recurring run rate of at least US$1.4 billion per annum by the end of the fourth year following Completion. Please refer to Appendix 5 of this Announcement for further details of these estimated synergies.
• For the purposes of quantifying the pre-tax cost synergies stated above, the AB InBev Directors have only considered the controlled businesses of each of SABMiller and AB InBev, excluding, for the avoidance of doubt, any joint ventures and associates.
• The AB InBev Directors also believe that additional revenue and cash flow synergies may be realised that cannot be quantified for reporting under the City Code at this time. The AB InBev Directors believe that significant further value can be created through the utilisation of the combined global distribution network in order to expand brand portfolio sales worldwide and by leveraging the innovation successes of both companies.
• While the geographic footprints of AB InBev and SABMiller are largely complementary, AB InBev will work with the relevant authorities in seeking to bring all potential regulatory reviews to a timely and appropriate resolution.
• Demonstrating AB InBev’s commitment to promptly and proactively address regulatory considerations, AB InBev is pleased to confirm that it has today agreed to the sale, conditional on Completion, of SABMiller’s interest in MillerCoors LLC (a joint venture in the
U.S. and Puerto Rico between Molson Coors Brewing Company and SABMiller) and the Miller Global Brand Business to Molson Coors Brewing Company. Further details regarding this transaction are set out in an announcement released separately today.
• Commenting on today’s announcement, Carlos Brito, Chief Executive Officer of AB InBev said:
“We are excited about our agreement on the terms of a recommended acquisition of SABMiller to build the world’s first truly global brewer. We believe this combination will generate significant growth opportunities and create enhanced value to the benefit of all stakeholders. By pooling our resources, we would build one of the world’s leading consumer products companies, benefitting from the experience, commitment and drive of our combined global talent base. Our joint portfolio of complementary global and local brands would provide more choices for beer drinkers in new and existing markets around the world. Moreover, a combination of our two companies would allow us to make a greater and more positive impact on the communities in which we live and work, drawing on our shared commitment in this regard. It has long been our dream to build the Best Beer Company Bringing People Together For a Better World, and we believe this combination represents a step change for our business and our journey towards achieving that goal.”
• Commenting on the Transaction, Jan du Plessis, Chairman of SABMiller said:
“SABMiller has an unmatched footprint in fast-growing developing markets, underpinned by our portfolio of iconic national and global brands. However, AB InBev’s offer represents an attractive premium and cash return for our shareholders, and secures earlier delivery of our long-term value potential, which is why the Board of SABMiller has unanimously recommended AB InBev’s offer.”
• Commenting on the Transaction, Alan Clark, Chief Executive Officer of SABMiller said:
“SABMiller grew from small beginnings, brewing quality cold beer for thirsty miners in the dusty streets of 19th century Johannesburg. More than 120 years later, generations of incredibly talented people have built a highly-admired, high-performing global beer and beverage business.
We’ve always nurtured the art of brewing, which has given us a stable of locally-loved and internationally-famous beers. What’s also made us special is our deep understanding of navigating different local markets, catering for local tastes and helping build the communities around us.
Listing on the London Stock Exchange in 1999 was the launch-pad for our global ambitions, leading to the creation of the number two global brewer and a FTSE-10 company, with industry-leading shareholder returns. The SABMiller story is a simply amazing achievement, and everyone who has been a part of it should feel immensely proud of the value they have helped create. I am sure the next chapter will bring new opportunities for exceptional success.”
• The SABMiller Directors, who have been so advised by Robey Warshaw, J.P. Morgan Cazenove, Morgan Stanley and Goldman Sachs as to the financial terms of the Cash Consideration, consider the terms of the Cash Consideration to be fair and reasonable. In
providing advice to the SABMiller Directors, Robey Warshaw, J.P. Morgan Cazenove, Morgan Stanley and Goldman Sachs have taken into account the commercial assessments of the SABMiller Directors.
• Accordingly, the SABMiller Directors intend unanimously to recommend that SABMiller Shareholders vote in favour of the SABMiller Resolutions proposed at the UK Scheme Court Meeting and the SABMiller General Meeting.
• The SABMiller Directors have irrevocably undertaken to vote (or to procure, or to use reasonable endeavours to procure, the vote) in favour of the SABMiller Resolutions in respect of all of the SABMiller Shares of which they are the beneficial holders or in which they are interested, being, in aggregate 651,221 SABMiller Shares representing approximately 0.04% of SABMiller’s issued share capital on 10 November 2015, being the last Business Day before the date of this Announcement. Further details of these irrevocable undertakings are set out in paragraph 19 and Appendix 4 to this Announcement, including the circumstances in which the irrevocable undertakings cease to be binding.
• The SABMiller Directors, and (in providing their advice to the SABMiller Directors) Robey Warshaw, J.P. Morgan Cazenove, Morgan Stanley and Goldman Sachs express no view as to the Partial Share Alternative. Their views in this regard will be provided in the UK Scheme Document.
• SABMiller Shareholders should ascertain whether acquiring or holding the Restricted Shares is affected by the laws of the relevant jurisdiction in which they reside and consider whether Restricted Shares are a suitable investment in light of their own personal circumstances and are, therefore, strongly recommended to seek their own independent financial, tax and legal advice in light of their own particular circumstances and investment objectives before deciding whether to elect for the Partial Share Alternative. Any decision to elect for the Partial Share Alternative should be based on independent financial, tax and legal advice and a full consideration of this Announcement and the Transaction Documents (when published).
• AB InBev has received irrevocable undertakings from Altria Group, Inc. and BEVCO Ltd., the largest shareholders in SABMiller, to vote in favour of the SABMiller Resolutions proposed at the UK Scheme Court Meeting and the SABMiller General Meeting (or to consent to be bound by the UK Scheme) and to elect for the Partial Share Alternative in respect of their entire beneficial holdings of 430,000,000 and 225,000,000 SABMiller Shares respectively, representing in aggregate approximately 40.45% of SABMiller’s issued share capital at the close of business on 10 November 2015 (being the last Business Day before the date of this Announcement). In the event that elections for the Partial Share Alternative would require more than 326,000,000 Restricted Shares and £2,545,387,824 in cash then such elections will be scaled back pro rata to the size of such elections (or as near thereto as AB InBev in its absolute discretion considers practicable). Further details of these irrevocable undertakings are set out in paragraph 19 and Appendix 4 to this Announcement, including the circumstances in which the irrevocable undertakings cease to be binding.
• The Belgian Offer and the Belgian Merger will each require the approval of the AB InBev Shareholders. The AB InBev General Meeting will be held before the SABMiller Meetings.
The AB InBev Directors consider the Belgian Offer and the Belgian Merger to be in the best interests of AB InBev and the AB InBev Shareholders as a whole and intend unanimously to recommend that AB InBev Shareholders vote in favour of the AB InBev Resolutions to be proposed at the AB InBev General Meeting which will be convened in connection with the Transaction.
• The AB InBev Directors have received financial advice from Lazard in relation to the Transaction. In providing its advice to the AB InBev Directors, Lazard has relied upon the AB InBev Directors’ commercial assessment of the Transaction.
• AB InBev and SABMiller have received irrevocable undertakings from the AB InBev Reference Shareholder, EPS and BRC, who collectively hold approximately 51.8% of the issued share capital of AB InBev, to vote in favour of the AB InBev Resolutions at the AB InBev General Meeting. Further details of these irrevocable undertakings are set out in paragraph 19 and Appendix 4 to this Announcement, including the circumstances in which these irrevocable undertakings cease to be binding.
• It is intended that the Transaction will be implemented by way of a three stage process involving: (i) a UK law court-sanctioned scheme of arrangement under Part 26 of the Companies Act 2006 pursuant to which each UK Scheme Shareholder will receive 100 Initial Shares in Newco in respect of each of its SABMiller Shares; (ii) a Belgian law voluntary cash takeover offer by AB InBev for all of the Initial Shares pursuant to the Belgian Law of 1 April 2007 on takeover bids and the Belgian Royal Decree of 27 April 2007 on takeover bids pursuant to which SABMiller Shareholders who wish (or are deemed) to elect to do so will receive the Cash Consideration in return for their Initial Shares and SABMiller Shareholders who wish to elect to receive the Partial Share Alternative will receive the cash element of the Partial Share Alternative and retain the relevant proportion of their Initial Shares, which will become Restricted Shares; and (iii) a Belgian law reverse merger of AB InBev and Newco under the Belgian Companies Code pursuant to which AB InBev Shareholders will become shareholders in Newco and Newco will be the surviving entity and the new holding company of the Combined Group. Further details of the intended structure of the Transaction are contained in paragraph 12 of this Announcement.
• The Transaction will be subject to the Pre-Conditions set out in Appendix 1, the Conditions and certain further terms set out in Appendix 2 and to the full terms and conditions which will be set out in the Transaction Documents including the approval of SABMiller Shareholders, the sanction of the UK Scheme by the UK Court and the approval of AB InBev Shareholders. The Pre-Conditions and Conditions include the receipt of various antitrust and other regulatory approvals, as further described in paragraph 7 of this Announcement.
• The UK Scheme Document will include full details of the Transaction, together with notices of the UK Scheme Court Meeting and the SABMiller General Meeting and the expected timetable, and will specify the action to be taken by SABMiller Shareholders. The UK Scheme Document will be despatched to SABMiller Shareholders as soon as reasonably practicable after the date on which the Pre-Conditions are satisfied and/or waived, as applicable.
• The Belgian Offer Documents and the Belgian Merger Documents, containing details of the Belgian Offer and the Belgian Merger respectively, will be made available prior to the AB
InBev General Meeting, the SABMiller Meetings and the Newco General Meeting. In addition, AB InBev and Newco will prepare the Belgian Merger US Documents which will be made available to all holders of AB InBev ADRs and all AB InBev Shareholders having their registered address in the United States.
• The Transaction is expected to complete in the second half of 2016, subject to the satisfaction or waiver of the Pre-Conditions set out in Appendix 1 the Conditions and certain further terms set out in Appendix 2 and to the full terms and conditions which will be set out in the Transaction Documents.
This summary should be read in conjunction with, and is subject to, the full text of this Announcement (including the Appendices). The Transaction will be subject to the Pre- Conditions set out in Appendix 1, the Conditions and certain further terms set out in Appendix 2 and to the full terms and conditions which will be set out in the Transaction Documents. Appendix 3 contains sources and bases of certain information contained in this Announcement. Details of irrevocable undertakings received by AB InBev are set out in paragraph 19 and Appendix 4. Appendix 5 contains information relating to the AB InBev Quantified Financial Benefits Statement made in this Announcement and the reports of AB InBev’s reporting accountant and lead financial adviser, as well as information relating to the SABMiller Quantified Financial Benefits Statement. Appendix 6 contains details regarding Newco and the key terms of the Newco Shares. Appendix 7 contains the definitions of certain terms used in this Announcement.
For the purposes of Rule 28 of the City Code, the AB InBev Quantified Financial Benefits Statement contained in this Announcement is the responsibility of AB InBev and the AB InBev Directors and the SABMiller Quantified Financial Benefits Statement is the responsibility of SABMiller and the SABMiller Directors. Any statement of intention, belief or expectation for the Combined Group following Completion is an intention, belief or expectation of the AB InBev Directors and not of the SABMiller Directors.
Transaction Microsite and CEO Video
Further information, including all documents related to the transaction and a video of AB InBev CEO Carlos Brito discussing the combination, can be found at: www.globalbrewer.com.
Analyst and investor presentations
AB InBev will be hosting a presentation to investors and analysts on the Transaction today. Details for the presentation/call are as follows:
Time: 8:00 a.m. EST / 1:00 p.m. GMT / 2:00 p.m. CET
International Dial-In Number: +1 612 234 9960
US Dial-In Number: +1 800 230 1074
The presentation will also be webcast through the following link:
http://cache.merchantcantos.com/webcast/webcaster/4000/7464/16531/53971/Lobby/default.ht m
Subject to certain restrictions, the recorded presentation and the accompanying slides will be available to all interested parties at www.ab-inbev.com and www.globalbrewer.com. Your attention is also drawn to the important information at the back of this Announcement.
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