AB no longer world's largest brewer

[Fishbone]

Brew-ha-ha

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copy & paste.

k thx bye.

[Fishbone]

EUROPEAN BUSINESS NEWS








BREWING A DEAL



• AmBev, Interbrew Reach Merger Accord
03/03/04

• Interbrew, AmBev Discuss Tapping 'Significant' Deal
3/2/04

•



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Interbrew, AmBev Unveil
Merger Accord

A WALL STREET JOURNAL ONLINE NEWS ROUNDUP


Brazil's AmBev and Belgium's Interbrew Wednesday announced that they agreed to combine their businesses in a complicated €9.2 billion ($11.2 billion) stock- and debt-swap deal, in a merger that could displace Anheuser-Busch Cos. as the world's largest brewer by volume.

The combined group will be called InterbrewAmBev, the companies said.

The transaction involving the world's No.5 and No.3 brewers, respectively, could shake up the global beer market, forming a company with a combined market capitalization of more than $20 billion. The deal could accelerate a spate of mergers aimed at tapping into developing nations.

It brings together a company with a dominant position in Latin America -- Companhia de Bebidas das Americas, or AmBev -- with Europe's Interbrew, which had yet to plant its flag in the subcontinent and was at odds with its Mexican venture partner.

The combined InterbrewAmBev would have a global market share of about 14% and annual revenue of €9.5 billion ($11.9 billion), the companies said. InterbrewAmBev will be able "to leverage three global flagship brands -- Stella Artois, Beck's and Brahma -- while further strengthening specialty and local brands," the companies said.

Interbrew and AmBev estimate the combined group "can generate €280 million of annual synergies through a combination of technical, procurement, and other general and administrative cost savings, and commercial synergies including cross-licensing of existing brands."

The deal is expected to be earnings accretive to Interbrew shareholders as of 2006, the companies said. For AmBev, the transaction will be accretive in the first full year of combined operations, they said.

Shares of Interbrew fell sharply Wednesday on news of the agreement, as investors continued to fret that the Belgian brewer is paying too much. Interbrew was down 5.7% at €21.70 a share in midday trading in Brussels. AmBev's shares fell 6% Tuesday in Brazil amid speculation the deal would not be a merger, after rising more than 4% on Monday amid thoughts it would.

The complicated terms of the deal reflect both political sensitivities in Brazil and the desire of majority shareholders in both companies to keep a tight grip on the new beer powerhouse. The two merger partners will continue to exist as separately listed entities for now.


The proposed transaction, already drawing skepticism from some investors, could be controversial because the first stage involves a deal between controlling shareholders of AmBev and Interbrew. Interbrew will issue 141.7 million new Interbrew shares to the controlling shareholders of Braco SA, a company that controls 52% of AmBev voting stock, in exchange for 100% of Braco. Interbrew will hold about a one-fifth economic interest in AmBev as a result of this part of the transaction.

Braco shareholders -- three former Brazilian investment bankers – will place the new Interbrew shares in Stichting Interbrew, a three-family trust that controls 63.7% of voting rights in the Belgium brewer, a person familiar with the matter said. Stichting Interbrew eventually will own 70% of the combined entity, the person said.

AmBev will issue 9.5 billion ordinary shares and 13.8 billion preferred shares to Interbrew and assume debt of $1.5 billion in exchange for Interbrew's Canadian subsidiary, Labatt, including its 30% interest in Femsa Cerveza -- a unit of Fomento Economico Mexicano SA, or Femsa -- and its 70% interest in Labatt USA. Labatt will be merged into AmBev, which will be responsible for all operations in the Americas.

In accordance with Brazilian corporate law, InterbrewAmBev will soon commence a tender offer for all remaining outstanding AmBev ordinary shares owned by the public, the companies said. Both companies will retain their separate stock-market listings.

On the Interbrew side, the transaction doesn't involve shareholders other than the de Spoelberch, de Mevius and de van Damme families.

"When everything is settled," Interbrew will own 57% of the economic interest and 85% of the total voting interest in AmBev, John Brock, chief executive officer of Interbrew, said in a statement.

But he insisted it was not a takeover. "We'll still end up with two very separate publicly traded companies but where we can look for opportunities to run them together, that's what we'll do," he said.

The companies said the transaction, which is subject to customary regulatory conditions and shareholder approval, has been unanimously recommended by the boards of both Interbrew and AmBev.

"The combination preserves the best of both companies, while enhancing our profitability and prospects," said Mr. Brock. "For Interbrew, it also represents an opportunity to enter some of the fastest growing beer markets in the world," he said.

Marcel Herrmann Telles, co-chairman of AmBev, said: "A unified operation for the Americas, from Canada to Argentina, is a very exciting prospect. More broadly, we can now achieve our long-term goal of opening the world's largest markets for AmBev's brands."

AmBev was permitted to take control of more than two-thirds of the Brazilian beer market in 2000, on condition that it wouldn't be sold for 10 years -- which meant the two sides needed to avoid the appearance of the smaller AmBev's being acquired by Interbrew. AmBev executives met Brazilian President Luiz Inacio Lula da Silva Tuesday in Brasilia to brief him.

InterbrewAmBev will be headquartered in Leuven and will trade on the Brussels exchange, while AmBev will continue to be a publicly traded company on the Brazilian market and on the New York Stock Exchange.

Mr. Brock said AmBev will have two co-CEOs -- one for North America, one for South America -- who will report to the AmBev board and to the global board in Belgium. He expects the deal to close by year end.

Analysts said a deal might spark a bidding war for AmBev, the world's fifth-largest brewer and the dominant player in Latin America. AmBev has a presence in every Latin American country except Colombia and Mexico, and it sells two-thirds of the beer in Brazil's massive market.

Both companies have expanded rapidly through acquisitions in recent years, and Interbrew is keen on winning a bigger foothold in emerging markets where beer consumption is rising, analysts say. AmBev announced last month that it would extend its Caribbean presence by paying $100 million to take control of the Dominican Republic's sole PepsiCo Inc. distributor and build a brewery.

While beer consumption in the U.S. and Western Europe is largely stagnant, it is expected to increase 5% annually over the next five years in emerging markets like Brazil, a country of 178 million people that has the world's fourth-largest beer market, after China, the U.S. and Germany.

Both AmBev and Interbrew separately released financial results Wednesday. Interbrew's 2003 net profit rose 8.1% to €505 million. The company blamed the weaker-than-expected figure on the sagging dollar. Sales rose slightly to €7.04 billion from €6.99 billion, as higher revenue in Europe compensated for declines in North America and Russia.

The Belgian brewer boosted its dividend by 9.1% to 36 European cents, and said it expects to deliver organic profit growth in 2004.

AmBev said its fourth-quarter net profit totaled 433.7 million reals ($149.6 million or €122.6 million), up slightly from 431.4 million reals a year earlier. Revenue increased 6.4% to 2.81 billion reals from 2.64 billion reals.

Write to the Online Journal's editors at [email protected]

[TTB]

Ugh oh

Pat Stokes won't like this news.

[Weird_English_Guy]

Originally posted by Fishbone@Mar 3 2004, 02:59 PM
The combined group will be called InterbrewAmBev, the companies said.

What a good name, I'm sure it will catch on.

[TTB]

Originally posted by Weird_English_Guy+Mar 3 2004, 09:01 PM-->

QUOTE(Weird_English_Guy @ Mar 3 2004, 09:01 PM)