NEW YORK Philip Morris Companies Inc. announced an agreement with South African Breweries plc to merge Miller Brewing Company into South African Breweries plc to form the world’s second-largest brewer, with pro forma revenues of $9.3 billion for the fiscal year ended March 31, 2002.
The transaction, with an implied value of approximately $5.6 billion, including $3.6 billion in stock and $2.0 billion in Miller Brewing Company debt, is expected to close in July, subject to customary regulatory review and South African Breweries plc shareholder approval. Upon closing, South African Breweries plc will change its name to SABMiller plc.
The assumption of Miller Brewing Company’s debt will result in cash flow of approximately $1.7 billion for Philip Morris Companies Inc. (Philip Morris), which will be used to accelerate its share repurchase program in 2002.
SABMiller, which would have generated pro forma earnings before interest, taxes and amortization (EBITA) of $1.2 billion on pro forma beer sales volume of 120 million hectoliters (102 million barrels) for the year ended March 31, 2002, will continue to be headquartered in London. Graham Mackay, current chief executive of South African Breweries plc, will lead the enlarged group as chief executive. John D. Bowlin, current president and chief executive officer of Miller Brewing Company, will be responsible for SABMiller’s businesses in the Americas and will report to Mr. Mackay.
Louis C. Camilleri, president and chief executive officer of Philip Morris, said: “We are delighted with today’s announced transaction, which is strategically compelling and is in the best interest of our shareholders. 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.”
Graham Mackay, chief executive of South African Breweries plc, said: “The transaction represents a new chapter in our development, taking SABMiller to the number two position globally, and positioning it to be a major participant in the on-going consolidation of the global beer industry. The transaction will provide access for South African Breweries plc and its shareholders to a significant position in the U.S. market, which enjoys the brewing industry’s largest profit pool. Furthermore, it will enhance South African Breweries plc’s international brand portfolio.”