RICHMOND, Va.--(BUSINESS WIRE)--Nov. 11, 2015--
Altria Group, Inc. (Altria) is pleased that Anheuser-Busch InBev SA/NV
(AB InBev) today announced its firm offer to effect a business
combination with SABMiller plc (SABMiller) to create the largest beer
company in the world in a cash and stock transaction valued at
approximately $107 billion.
“Altria fully supports this transaction, and we strongly believe that
the deal is in the best interest of our shareholders,” said Marty
Barrington, Altria’s Chairman, Chief Executive Officer and President.
“Upon closing, Altria will continue to participate in the global brewing
profit pool as a large and significant shareholder in what will be the
industry’s largest company. We continue to work constructively with the
parties toward closing, and we look forward to working with the AB InBev
management team at the new, combined company.”
At closing, Altria expects to receive an approximately 10.5% stake in
the new, combined company and approximately $2.5 billion in cash,
subject to proration. In addition, the announced transaction is expected
to provide Altria with two seats on the new company’s board of
directors, continue the use of equity accounting for the beer asset’s
contribution to Altria’s earnings, and maintain a strong asset on the
balance sheet. Finally, the transaction structure provides Altria with
Additional details of the transaction are attached on Exhibit A.
Altria currently owns approximately 27% percent of SABMiller’s ordinary
shares outstanding and has been a SABMiller shareholder since 2002.
Altria’s wholly-owned subsidiaries include Philip Morris USA Inc., U.S.
Smokeless Tobacco Company LLC, John Middleton Co., Nu Mark LLC, Ste.
Michelle Wine Estates Ltd. (Ste. Michelle) and Philip Morris Capital
The brand portfolios of Altria’s tobacco operating companies include Marlboro®,
Black & Mild®, Copenhagen®, Skoal®,
MarkTen® and Green Smoke®. Ste.
Michelle produces and markets premium wines sold under various labels,
including Chateau Ste. Michelle®, Columbia Crest®,
14 Hands® and Stag’s Leap Wine Cellars™,
and it imports and markets Antinori®, Champagne
Nicolas Feuillatte™, Torres® and
Villa Maria Estate™ products in the United
States. Trademarks and service marks related to Altria referenced in
this release are the property of Altria or its subsidiaries or are used
with permission. More information about Altria is available at
altria.com and on the Altria Investor app.
Forward-Looking and Cautionary Statements
This press release contains forward-looking statements that involve a
number of risks and uncertainties and are made pursuant to the Safe
Harbor Provisions of the Private Securities Litigation Reform Act of
1995. Important factors that may cause actual results and outcomes to
differ materially from those contained in the forward-looking statements
included in this press release are described in Altria’s publicly filed
reports, including its Annual Report on Form 10-K for the year ended
December 31, 2014 and its Quarterly Report on Form 10-Q for the period
ended September 30, 2015.
In addition, the factors related to AB InBev’s proposed transaction to
effect a business combination with SABMiller include the following: the
risk that one or more conditions to closing the proposed transaction may
not be satisfied; the risk that a shareholder or regulatory approval
required for the proposed transaction is not obtained or is obtained
subject to conditions that are not anticipated; AB InBev’s inability to
achieve the contemplated synergies and value creation from the proposed
transaction; the fact that Altria’s election to receive transaction
consideration in the form of equity is subject to proration, which may
result in a reduced percentage ownership of the combined company,
additional tax liabilities and/or changes in our accounting treatment of
the investment; the fact that the equity securities to be received by
Altria as transaction consideration will be subject to restrictions on
transfer lasting five years from completion of the proposed transaction;
the risk that AB InBev’s share price, which affects the value of
Altria’s transaction consideration, will fluctuate based on a variety of
factors which are beyond Altria’s control; the fact that the
strengthening of the U.S. dollar against the British pound would
adversely affect Altria’s cash consideration as the British pound would
translate into fewer U.S. dollars; the risk that the tax treatment of
Altria’s transaction consideration is not guaranteed; and that the tax
treatment of the dividends Altria receives from the new company may not
be as favorable as dividends from SABMiller.
This Exhibit A provides additional details regarding the Anheuser-Busch
InBev SA/NV (AB InBev) firm offer to effect a business combination with
SABMiller plc (SABMiller) and the anticipated implications for Altria
Group, Inc. (Altria). The transaction is subject to certain closing
conditions, including shareholder approvals of both SABMiller and AB
InBev and receiving the required regulatory approvals. Dollar amounts
Altria will receive are estimated at this time and are subject to
change. Additional risks and uncertainties are identified under the
heading “Forward-Looking and Cautionary Statements” in the press release
to which this Exhibit is attached.
Financial Terms of the Offer
SABMiller shareholders will receive 44 GBP in cash for each SABMiller
share, with a partial share alternative (PSA) available for
approximately 41% of the SABMiller shares.
Under the terms of the PSA, SABMiller shareholders may elect to receive
for each SABMiller share held (i) 0.483969 restricted shares (the
Restricted Shares) in a newly formed Belgian company (NewCo) that will
own the combined SABMiller-AB InBev business plus (ii) 3.7788 GBP in
cash. The Restricted Shares of NewCo will be unlisted and subject to
certain restrictions, including a five-year lock-up.
NewCo will acquire SABMiller and, following the closing of that acquisition,
AB InBev will merge into NewCo.
Position of Support
On November 10, 2015 Altria’s Board of Directors authorized Altria to
provide an irrevocable undertaking to vote in favor of the proposed
transaction and to elect the PSA. Altria delivered its irrevocable
undertaking on November 11, 2015.
Altria expects to exchange its approximately 27% economic and voting
interest in SABMiller for an interest that will be converted into
Restricted Shares representing an approximately 10.5% economic and
voting interest in NewCo plus approximately $2.5 billion in cash,
subject to proration.
Tax Treatment and Accounting Gain
Except for the cash consideration, Altria expects that the transaction
will result in a deferral of United States corporate income tax.
Upon closing of the transaction, Altria estimates that it will record a
one-time pre-tax accounting gain of approximately $12 billion, or $8
billion after-tax. This estimate is based on the AB InBev share price
and GBP to USD exchange rate as of November 10, 2015, and the book value
of Altria’s investment in SABMiller at September 30, 2015. The actual
gain recorded at closing may vary significantly from this estimate based
on changes to these factors and any proration of Restricted Shares.
The number of shares that Altria receives and its corresponding
percentage ownership of NewCo at closing are subject to proration
because the PSA limits the maximum number of shares that may be issued
under the offer to 326 million NewCo Restricted Shares. To the extent
that elections for the PSA exceed this maximum number and cannot be
satisfied in full, the equity portion of all PSA elections will be
adjusted downwards on a pro rata basis. It is possible that significant
proration could (i) reduce Altria’s projected percentage ownership of
NewCo; (ii) increase the amount of cash that Altria receives; (iii)
increase the amount of the pre-tax gain recorded by Altria; (iv) impose
additional tax liabilities on Altria; and (v) impact Altria’s ability to
account for its investment in NewCo under the equity method of
Credit Suisse and Perella Weinberg Partners are the financial advisors
and Wachtell, Lipton, Rosen & Katz, Macfarlanes and McDermott Will &
Emery are providing legal counsel to Altria for the deal.
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Source: Altria Group, Inc.
Altria Group, Inc.
Media Relations, 804-484-8897