30 May 2002
South African Breweries drinks up Miller for $5.6B
Johannesburgh, South Africa - South African Breweries plc said today it has bought Miller Brewing Co. from Philip Morris Co. Inc. for $5.6 billion, comprised of $3.6 billion in stock and $2 billion in Miller debt.
As part of the deal, Philip Morris, the world's biggest cigarette manufacturer, will receive 430 million SAB Miller shares, meaning it will own 36% of the new SABMiller. Its voting right at shareholder meetings has been capped at 24.99%, however. Philip Morris, the maker of Marlboro cigarettes and owner of Kraft foods, has agreed not to sell any shares before 30 June 2005.
The acquisition would create the world's second-largest brewer behind Budweiser-brewer Anheuser-Busch. The deal is expected to close in July and is subject to customary regulatory review and South African Breweries plc shareholder approval, officials said.
SAB, which brews Castle and Pilsner Urquell beers, is currently ranked number four in the world and markets its brands in Africa, China and Eastern Europe. Milwaukee, Wis.-based Miller's brands include Miller Lite, Miller Genuine Draft, Miller High Life, Milwaukee's Best and Foster's. It is the second largest brewer in the United States and sixth largest in the world.
SAB is also one of the world's largest bottlers and distributors of Coca-Cola products outside the U.S., with total annualized sales in the year ended 31 March 2002 of 204.3 million cases of carbonated soft drinks.
"The transaction will provide access for SAB to a significant position in the U.S. market, which enjoys the brewing industry's largest profit pool," SAB chief executive Graham Mackay said in a statement.
Said Louis C. Camilleri, Philip Morris CEO: "SABMiller will immediately become the world's second-largest brewer, with arguably the best geographic footprint among all global brewers. The enlarged group will have the ambition, as well as the financial and managerial capability, to become the world's leading brewer."
John Bowlin, Miller CEO, will be responsible for SABMiller's business in the U.S. and Central America, reporting to Mackay, who will become SABMiller chief executive. Miller Brewing's earnings before interest, taxes and amortization (EBITA) has grown at a compound annual rate of 7.5%.
SAB has set its eyes on the world stage, becoming the largest non-Chinese brewer in China. It is following the same strategy with Miller, buying a domestic brewer and shaping its beer production rather than introducing its own brands, such as Castle, the best-known South African beer brand.
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