| Thu 30 May 2002, 0:00 | | Proposed Transaction Between Sab And Philip Morri |
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PROPOSED TRANSACTION BETWEEN SAB AND PHILIP MORRIS REGARDING MILLER
Share Code : SOSAB
ISIN code : GB0004835483
London and Johannesburg, 30 May 2002. South African Breweries plc ("SAB")
has announced today that it has entered into an agreement with Philip Morris
Companies Inc. ("Philip Morris") under which SAB will acquire 100 per cent.
of Miller Brewing Company ("Miller") (the "Transaction"). In consideration,
SAB will issue to Philip Morris 430 million shares. The pre-market
speculation implied enterprise value of Miller is US$4,993 million,
including net debt of US$2,000 million. It is proposed that the combined
entity will be called SABMiller plc ("SABMiller").
SABMiller will:
be a leading player in the US market, the brewing industry`s largest profit
pool;
have a balanced geographic spread of earnings from both high growth
developing markets and cash generative developed markets;
enjoy an international portfolio of strong brands; and
become the world`s second largest brewer, with pro forma 2001 lager volumes
in excess of 120 million hectolitres.
In addition, benefits arising from the transaction will include:
strong cash flow generation showing pro forma adjusted EBITDA for the 12
months to 31 March 2002 of US$1,512 million;
an improved credit profile with a significantly lower cost of capital;
the ability to continue to participate in the ongoing consolidation of the
global beer market; and
the benefits of having Philip Morris as a supportive long-term shareholder.
The transaction will be earnings enhancing in year one pre-goodwill
amortisation and before synergies, and is expected to deliver annual cost
synergies of US$50 million by the end of year three.
Commenting on the proposed transaction, Graham Mackay, Chief Executive of
SAB, said:
"This transaction, by which Miller will be merged into the SAB businesses,
represents a new chapter in our development, taking SABMiller to the number
two position globally, and positioning us to be a major participant in the
ongoing consolidation of the global beer industry. The transaction will
provide access for SAB to a significant position in the US market, which
enjoys the brewing industry`s largest profit pool. Furthermore, it will
enhance SAB`s international brand portfolio."
In addition, Louis Camilleri, Chief Executive Officer of Philip Morris,
said:
"We are delighted with today`s announcement, which is strategically
compelling and is in the best interests of our shareholders. SABMiller will
immediately become the world`s second-largest brewer, with arguably the best
geographical 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 D. Bowlin, President and Chief Executive Officer of Miller, said:
"Everyone wins through this dynamic combination, including Miller`s
employees, customers and distributors. We are combining two great brewers
with distinct yet complementary assets and talents with the promise to
become greater than the sum of the parts. Miller is a great American brewer
that will now become part of a focused, global brewing enterprise with
significant growth opportunities around the world."
SABMiller will be well positioned within the global brewing industry. From
the outset, SABMiller will be the world`s second largest brewer with leading
market positions in Europe, North America, Central America, China and
Africa. This diverse exposure to both developed, cash generative markets as
well as to fast growing developing markets provides exciting growth
prospects for the Enlarged Group.
In addition, SABMiller will benefit from the combination of global scale, a
strong management team, a diverse and balanced earnings base, a broad
portfolio of leading brands and a supportive, long-term shareholder.
SABMiller will use these advantages to position itself at the forefront of
the consolidating brewing industry.
The consideration will be satisfied by the issue to Philip Morris of 430
million SAB shares. The shares issued to Philip Morris comprise two classes
of equity capital; Ordinary Shares and unlisted low voting participating
shares ("Participating Shares"). These combined will equate to an economic
interest of 36.03 per cent. (excluding the shares owned by Safari Limited).
Philip Morris` total voting rights have been capped at 24.99 per cent. of
the votes exercisable at a general meeting.
Assuming the same value for both the Ordinary Shares and Participating
Shares, the closing middle-market price of 490 pence per Ordinary Share as
at 14 March 2002 (the last date prior to market speculation that SAB was in
discussions with Philip Morris regarding Miller), a /US$ exchange rate of
1.4204, and net debt of not more than US$2,000 million at Completion, Miller
has an implied enterprise value of US$4,993 million. Based on the closing
middle-market price of 576 pence per Ordinary Share as at 29 May 2002 (the
date prior to the announcement of the Transaction) and on an /US$ exchange
rate of 1.4623, Miller has an implied enterprise value of US$5,622 million.
Philip Morris will have an important investment in the Enlarged Group, and
will be a supportive long-term shareholder in SABMiller. Accordingly, Philip
Morris has agreed to be subject to a standstill agreement until December
2004 and a lock-up until June 2005. Following this lock-up period, Philip
Morris has agreed to enter into orderly marketing arrangements concerning
any disposal of its shareholding.
Graham Mackay and Malcolm Wyman will be Chief Executive and Chief Financial
Officer of SABMiller respectively, with John Bowlin, currently President and
Chief Executive Officer of Miller, to be responsible for SABMiller`s
business in the US and Central America. It is intended that the Board of
SABMiller will consist of two executive Directors and eleven non-executive
Directors. At Completion, Philip Morris is entitled to nominate three of the
non-executive Directors.
SABMiller will maintain its existing primary listing on the London Stock
Exchange, with its continued inclusion in the FTSE 100 Index, and will
likewise maintain its listing on the JSE Securities Exchange South Africa,
where it is included in the JSE 40.
In order to maintain the future financial flexibility of the Enlarged Group,
the Board of SAB is seeking the approval of Shareholders at the
Extraordinary General Meeting for the disapplication of pre-emptive rights
on an equity raising, depending on market conditions, for cash up to a
maximum of 170 million Ordinary Shares, which would represent approximately
14 per cent. of the enlarged equity share capital. Philip Morris has agreed
not to participate in this potential equity raising. This resolution will be
valid until the conclusion of the 2003 annual general meeting. In the
event of any such equity raising, qualifying shareholders, being
shareholders on the register at a date yet to be fixed, who duly evidence
their holdings will receive a greater allocation of shares, on a basis to be
determined, than they would otherwise have received.
The Transaction is conditional, inter alia, upon the approval of
Shareholders and certain regulatory clearances. The approval of
Shareholders will be sought at an Extraordinary General Meeting, the notice
of which will be set out in a circular to Shareholders. The Extraordinary
General Meeting is expected to be convened on 1 July 2002.
JPMorgan is acting as financial adviser to SAB and Cazenove and JPMorgan are
acting as joint corporate brokers. Dresdner Kleinwort Wasserstein and Lehman
Brothers Inc. are acting as joint financial advisers to Philip Morris.
This summary should be read in conjunction with the full text of the
following announcement.
There will be a presentation to analysts at 9.30 a.m. today (30 May 2002) in
the Ayres Room, 8th Floor, Deutsche Bank, 85 London Wall, EC2M 7AD and at 12
noon today for the media at the same location.
Should analysts be unable to attend the analysts` presentation in person,
there will be a dial in facility available. The Investor Relations
department of SAB will distribute details of this facility.
The analysts` presentation will have a replay facility available from noon
today until close of business on 6 June 2002, which may be accessed as
follows:
From the UK Dial in: 020 8288 Access code: 617172
4459
From the US Dial in: +44 20 Access code: 617172
8288 4459
For further information, please contact:
South African
Breweries plc
Nick Chaloner Director of Tel: +44 20 7659
Communications 0119
Mob: +44 7880 502 755
Anna Miller Head of Investor Tel: +44 20 7659
Salzman Relations 0106
Ciaran Baker Head of Corporate Tel: +44 20 7659
Communications 0120
Mob: +44 7979 954 493
Fergus Wylie Cubitt Consulting Limited Tel: +44 20 7367
5103
This announcement, a copy of the slide presentation and video
interviews with management are available on the SAB website at
www.sabplc.com and at www.cantos.com
Pictures for the media are available from www.newscast.co.uk
Financial Adviser and Corporate Corporate Broker
Broker
JPMorgan Cazenove
Julian Oakley David Mayhew
Managing Director Chairman
Tel: +44 20 7325 6287 Tel: +44 20 7588 2828
Ian Hannam Roger Lambert
Chairman, ECDM Europe Managing Director
Tel: +44 20 7325 1168 Tel: +44 20 7457 3347
This announcement has been issued by SAB and is the sole responsibility of
SAB.
JPMorgan is acting for SAB in connection with the proposed transaction and
no one else and will not be responsible to any one other than SAB for
providing the protections afforded to clients of JPMorgan nor for providing
any advice in relation to the transaction.
Dresdner Kleinwort Wasserstein and Lehman Brothers Inc. are acting for
Philip Morris in connection with the proposed transaction and no one else
and will not be responsible to any one other than Philip Morris for
providing the protections afforded to clients of Dresdner Kleinwort
Wasserstein and Lehman Brothers Inc. nor for providing any advice in
relation to the transaction.
This announcement is for information only and does not constitute an offer
or an invitation to acquire or dispose of any securities or investment
advice or an inducement to enter into investment activity. This
announcement does not constitute an offer to sell or issue or the
solicitation of an offer to buy or acquire SAB securities in any
jurisdiction.
The distribution of this announcement may be restricted by law. Persons
into whose possession this announcement comes are required by SAB to inform
themselves about and to observe any such restrictions.
This announcement includes `forward-looking statements`. These forward-
looking statements are made pursuant to the "Safe Harbor" provisions of the
United States Private Securities Litigation Reform Act of 1995. All
statements other than statements of historical facts included in this
announcement, including, without limitation, those regarding SAB`s financial
position, business strategy, plans and objectives of management for future
operations (including development plans and objectives relating to SAB`s
products and services) are forward-looking statements. Such forward-looking
statements involve known and unknown risks, uncertainties and other
important factors that could cause the actual results, performance or
achievements of SAB to be materially different from future results,
performance or achievements expressed or implied by such forward-looking
statements. Such forward-looking statements are based on numerous
assumptions regarding SAB`s present and future business strategies and the
environment in which SAB will operate in the future. These forward-looking
statements speak only as at the date of this announcement. SAB expressly
disclaims any obligation or undertaking to disseminate any updates or
revisions to any forward-looking statements contained herein to reflect any
change in the SAB`s expectations with regard thereto or any change in
events, conditions or circumstances on which any such statement is based.
PROPOSED TRANSACTION BETWEEN SAB AND PHILIP MORRIS REGARDING MILLER
Introduction and background
South African Breweries plc ("SAB") and Philip Morris Companies Inc.
("Philip Morris") announce today that they have entered into an agreement
under which Miller Brewing Company ("Miller") will be merged into SAB (the
"Transaction"), creating the world`s second largest brewer with a balanced
geographic spread of earnings between fast growing developing markets and
more developed, cash generative markets. In consideration, SAB will issue to
Philip Morris 430 million shares, consisting of approximately 235 million
Ordinary Shares and approximately 195 million low voting participating
shares ("Participating Shares") (together the "Consideration Shares").
Philip Morris will have an important investment in the Enlarged Group, and
will be a supportive long-term shareholder.
Following the Transaction and prior to the possible equity placing
(discussed below), Philip Morris` total economic interest in the Enlarged
Group will be 36.03 per cent. (excluding the shares owned by Safari Limited)
and its total voting interest will be 24.99 per cent. of the votes
exercisable at a general meeting. Following Completion, it is proposed that
SAB will be renamed SABMiller plc ("SABMiller").
Assuming the same value for both the Ordinary Shares and Participating
Shares, the closing middle-market price of 490 pence per Ordinary Share as
at 14 March 2002 (the last date prior to the market speculation that SAB was
in discussions with Philip Morris regarding Miller), a /US$ exchange rate
of 1.4204, and net debt of not more than US$2,000 million, Miller has an
implied enterprise value of US$4,993 million. Based on the closing middle-
market price of 576 pence per Ordinary Share as at 29 May 2002 (being the
date prior to the announcement of the transaction) and on an /US$ exchange
rate of 1.4623, Miller Brewing Company has an implied enterprise value of
US$5,622 million.
The Transaction is conditional, inter alia, upon the approval of SAB
shareholders and certain regulatory clearances. The Extraordinary General
Meeting is expected to be on 1 July 2002.
Rationale for the Transaction
The board of SAB (the "Board") believes that the Transaction with Miller is
a significant step in the implementation of SAB`s strategy to participate
actively in the ongoing consolidation of the global brewing industry and
enhance its position as a leading global brewer. The Board believes that
SABMiller`s balanced and diversified exposure to both fast growing
developing markets as well as to developed cash generative markets provides
attractive growth prospects for the Enlarged Group.
SABMiller will be one of the world`s most diverse international brewers with
leading market positions in Europe, North America, Central America, China
and Africa. The combined business will have the global scale, geographical
balance, quality brand portfolio, extensive distribution platform and
financial strength to enhance its competitiveness and drive shareholder
value.
The US market is the brewing industry`s largest and most profitable market
and, unlike many other developed markets, it has delivered recent growth in
consumption, in particular within the premium light, imports and flavoured
malt beverages ("FMB", also known as RTDs in Europe) categories.
Miller is the second largest brewer in the US with an attractive portfolio
of brands including Miller Lite, Miller Genuine Draft, Miller High Life,
Milwaukee`s Best and Foster`s. In addition, Miller has an exciting new
portfolio of leading premium FMB brands. As an integrated part of the
SABMiller group, the Miller management team will be well placed to continue
to take advantage of growth opportunities in this market.
SAB believes that the recent strategy introduced by Miller`s management team
will continue to benefit Miller`s ongoing performance. Initiatives include:
focusing marketing investment behind the core brands;
consolidation of its distribution network and improving distributor
relationships and retail execution;
increasing production efficiency; and
the introduction of new products - such as FMBs.
The Board believes that the combination of Miller`s strongly cash generative
US business with SAB`s leading international businesses will provide
significant ancillary benefits in terms of cross-selling of core brands such
as Pilsner Urquell, Miller Lite and Miller Genuine Draft, margin enhancement
through implementation of `best practice`, and ongoing benefits of economies
of scale.
The transaction creates:
Access for SAB to the US - the brewing industry`s most important market
The US market is the world`s largest and most profitable beer market. The
EBITDA generated in the US in 2000 was more than double that of the world`s
second most profitable market - Japan. This merger of Miller into SAB will
provide access for SAB`s Shareholders to this profit-pool and ensure
additional benefits from future opportunities in the US. Miller`s solid
number two position is an attractive platform for SAB in this large and
important beer market.
The world`s second largest brewer
SABMiller will have significant scale and international reach as the second
largest brewer in the world by volume, with pro forma March 2002 lager
volumes of more than 120 million hectolitres. In addition, it would have
had pro forma volumes of 34 million hectolitres of CSDs and other non-lager
related beverages for the same period. This scale will allow it to continue
to take advantage of opportunities to accelerate its growth in developing
markets, as well as giving it the ability to participate in additional
developed markets as appropriate.
A well balanced geographical spread of earnings
SABMiller will have an attractive balance of fast growing developing markets
and more developed cash generative markets.
Based on 2002 pro forma figures for SABMiller (pre exceptional items), the
EBITA generated by the Enlarged Group would have split geographically as
follows:
Region % EBITA
North America 35
South Africa 33
Europe 16
Africa and Asia 14
Central America 2
This analysis includes only four months of EBITA from SAB`s Central America
operations and excludes SAB`s recent acquisitions in China and India.
A strong portfolio of leading brands with cross-selling potential
The Enlarged Group will benefit from a complementary portfolio of leading
international, regional and local brands, which are well positioned
throughout their key market segments. SABMiller`s prominent market
positions will provide a strong base for further leveraging of this
portfolio. Particular opportunities include the cross-selling of Miller`s
key brands in several of SAB`s businesses as well as making Pilsner Urquell
available throughout Miller`s extensive US distribution network.
An attractive platform for further growth
SABMiller`s global network will provide an attractive platform for growth,
both organically as well as through further synergistic acquisitions or
partnerships of preference.
Occupying a top three position in more than 30 countries (including the
Castel interest), SABMiller is attractively positioned as one of the major
players in the rapidly consolidating brewing industry. The Enlarged Group`s
key markets will provide strong and stable cash flows, which can be used to
fund additional strategic and earnings enhancing acquisitions as
appropriate.
Financial strength and stability
For the 12 months to 31 March 2002, SABMiller would have generated pro forma
revenues and EBITDA of approximately US$9,266 million and US$1,512 million
respectively.
The Directors of SAB believe that the Enlarged Group`s exposure to the
strongly cash generative US market will substantially improve SABMiller`s
credit profile in the international debt capital markets, as well as
lowering the Group`s cost of capital.
In addition, as the Group reports in US dollars, the significant incremental
US dollar earnings of SABMiller will reduce the Group`s relative exposure to
currency fluctuations.
Earnings accretive in year one - excluding synergies
The Transaction is expected to be earnings enhancing, before acquisition
goodwill and synergies, in the current financial year.
Furthermore, the Transaction is expected to deliver annual cost synergies of
US$50 million by the end of year three resulting mainly from procurement
benefits and the application of `best practice` across the business. In
addition, revenue benefits are expected from the previously mentioned cross-
selling of brands.
Experienced and high quality management team
The Transaction will combine SAB`s well regarded management expertise, sound
operational track record and proven ability to integrate acquisitions with
Miller`s experienced management team led by John Bowlin, who will bring to
the Group an in-depth understanding of the US beer market and its
opportunities.
Long-term relationship with a supportive shareholder
Philip Morris will have an important investment in SABMiller, will be a
supportive long-term shareholder and has also stated that it is
supportive of the SABMiller strategy. Accordingly, Philip Morris has agreed
to a standstill period until 31 December 2004 and a lock-up period (in which
it will not be able to sell its shares, other than in specific
circumstances) until 30 June 2005. After 30 June 2005, any potential
disposal is subject to orderly marketing arrangements. Philip Morris also
has the right, subject to its ownership levels, to participate and/or
underwrite certain equity capital raisings, excluding the non pre-emptive
capital raising for which approval is sought. Philip Morris has the further
right, subject to the level of its economic interest in SABMiller, to
appoint up to three non-executive representatives to the SABMiller board.
The Board of SAB believes that the support from Philip Morris - the world`s
largest consumer product company - provides an important competitive
advantage to SABMiller.
SABMiller strategy
In line with the existing SAB business philosophy and strategy, SABMiller
will continue to focus on:
achieving profitable growth as a leading player in the global beer market;
driving volumes, productivity and margins in major markets;
optimising and expanding established positions in developing markets;
developing positions in the international premium beer market; and
seeking opportunities to enhance its position as a global brewer with
exposure to both developing and developed markets.
Information on Miller
Miller has been the second largest brewer in the US since 1977. In 2001,
Miller had volumes of 50 million hectolitres and a market share of 20 per
cent. In addition, Miller brewed 10 million hectolitres in 2001 under
contract brewing arrangements. The Miller brand portfolio has leading
positions in all the key market segments. The major brands are Miller Lite
(premium light), Miller Genuine Draft (premium regular), Miller High Life
(near premium), Milwaukee`s Best (budget), Foster`s (imports) and a new
portfolio of premium FMB brands.
Miller operates nine breweries across the US and has a strong national
distribution network and is one of the lowest cost brewers in the US.
In the year ended 31 December 2001, Miller generated a turnover of US$4,800
million and an adjusted EBITDA of US$546 million (before exceptional items
of US$34 million and amortisation of US$9 million and including allocated
Philip Morris central costs of US$88 million). If Miller had been part of
the Enlarged Group, it is estimated that its central costs would have been
US$40 million and adjusted EBITDA would have been US$594 million and
adjusted EBITA of US$463 million.
Agreements
Summary of the principal terms of the Transaction Agreement
SAB and Philip Morris have signed a Transaction Agreement under which SAB
will issue approximately 235 million Ordinary Shares of US$0.10 each and
approximately 195 million Participating Shares of US$0.10 each giving Philip
Morris an economic interest of 36.03 per cent. in SAB (excluding shares held
by Safari Limited). However, Philip Morris` voting interest will be
restricted to 24.99 per cent. of the votes capable of being cast at a
general meeting. At Completion, Miller will have net debt of not more than
US$2,000 million.
Summary of the principal terms of the Relationship Agreement
The Relationship Agreement sets out the mechanics by which SAB shall
maintain its independence from Philip Morris.
Under the terms of the Relationship Agreement, Philip Morris has been
granted a number of rights in respect of its shares in SAB, the principal
items being:
Philip Morris shall be entitled to nominate up to three non-executive
Directors, subject to the level of its economic interest in SAB;
for so long as Philip Morris` economic interest is 10 per cent. or more of
the Enlarged Group, Philip Morris shall have the right to receive certain
financial information; and
Philip Morris also has the right to participate in and/or underwrite certain
future equity capital raisings, excluding the non pre-emptive capital
raising for which approval is sought.
Under the terms of the Relationship Agreement, Philip Morris has agreed to a
number of restrictions in respect of its shares in SAB, the principal items
being:
Philip Morris shall not, save in certain specified circumstances, prior to
31 December 2004, acquire any equity securities in SAB as a result of which
Philip Morris` voting rights in SAB would exceed 24.99 per cent;
Philip Morris shall not, save in certain specified circumstances, prior to
30 June 2005, dispose of or take any charge over any equity securities in
SAB; and
Philip Morris may dispose of Ordinary Shares after 30 June 2005, but any
such disposal must be in accordance with orderly marketing arrangements.
The Panel on Takeovers and Mergers (the `Panel`) has indicated to SAB and
Philip Morris that the standstill and lock up provisions in the Relationship
Agreement, together with the proposed changes to the Articles of
Association, may give rise to a deemed concert party between Philip Morris
and persons connected with Philip Morris on the one hand and SAB and the
Board of SAB and persons connected with them on the other hand.
Accordingly, the Relationship Agreement provides that if circumstances arise
where any interest in shares in SAB is acquired by SAB or persons connected
with SAB, such that (when taken together with the shares in SAB in which SAB
and persons connected with SAB are then interested aggregated with the
shares in SAB then held by Philip Morris and persons connected with Philip
Morris) the aggregate Voting Interest of all those persons exceeds 29.99%,
the standstill and lock up restrictions described above will cease to apply.
SAB and Philip Morris have confirmed to the Panel that they will advise the
Panel if they become aware that such circumstances are likely to arise or
have arisen.
The Relationship Agreement has no fixed term, but ceases to apply if Philip
Morris` total voting interest in SAB falls below 10 per cent.
Summary of the principal terms of the Transitional Services Agreement
Under the terms of the Transitional Services Agreement, a subsidiary of
Philip Morris will provide Miller with certain services for a transitional
period of up to 30 months from Completion. These services will be provided
on a comparable basis as provided historically to Miller. The cost of
providing each service will be on an actual cost plus a service fee and
expenses basis.
Board of Directors
The composition of the Board of Directors of SABMiller will change following
the completion of this transaction. There will be two Executive Directors -
namely Graham Mackay (Chief Executive) and Malcolm Wyman (CFO).
In addition the SABMiller board will initially consist of 11 non-executive
Directors, of which Philip Morris can nominate three.
Dividends
The Consideration Shares will not be entitled to participate in the final
dividend of US18.5 cents declared by SAB in respect of its financial year
ended 31 March 2002. The Consideration Shares shall entitle Philip Morris to
receive a pro rata dividend (based on the date of Completion) for the six-
month period ending 30 September 2002.
SABMiller generally will seek to maintain its current dividend policy
(adjusted earnings per Ordinary Share dividend cover of 2.2 to 2.5 times).
Dividends will continue to be paid to SABMiller shareholders on the United
Kingdom section of the register in pounds sterling and US dollars and to
those SABMiller shareholders on the South African section of the register in
Rand at, in each case, the exchange rates prevailing at such time.
Financial reporting
SABMiller will continue to publish financial statements denominated in both
US dollars and Rand and prepared in accordance with UK GAAP. The financial
year-end will continue to be 31 March.
Announcement of results
SAB also today announced its preliminary results for the financial year
ended 31 March 2002.
Employees and SAB employee share schemes
SAB and Miller currently employ approximately 38,000 people in aggregate
worldwide. The existing employment terms and conditions, including pension
rights of employees, will be appropriately safeguarded. Both SAB and Miller
will continue to inform and, where appropriate, consult with relevant
employee organisations regarding the Transaction in accordance with
applicable legal and contractual requirements.
The Transaction will have no effect on the existing entitlements under the
SAB employee share schemes.
Amendment of the Articles of Association
As part of the arrangements for the Transaction, SAB shareholders will be
asked to approve amendments to the Articles of Association to create the new
class of Participating Shares and to give Philip Morris the right to appoint
up to three non-executive directors to the SAB board and to convert the
Ordinary Shares registered in the name of Safari Limited into non-voting
convertible shares.
The principal features of the Participating Shares are:
save as set out below, the Participating Shares shall rank pari passu with
the Ordinary Shares;
the Participating Shares carry a vote at general meetings of SAB on the
basis of one-tenth of a vote for every Participating Share on all
resolutions other than certain specified resolutions where they carry one
vote for each Participating Share; and
the Participating Shares are convertible into Ordinary Shares in certain
specified circumstances on a one for one basis.
Potential equity raising
In order to maintain the future financial flexibility of the Enlarged Group,
the SAB board is seeking the approval of SAB shareholders at the
Extraordinary General Meeting for the disapplication of pre-emptive rights
on an equity raising, depending on market conditions, for cash up to a
maximum of 170 million Ordinary Shares, which would represent approximately
14 per cent. of the enlarged equity share capital. Philip Morris has agreed
not to participate in this potential equity raising. This resolution will be
valid until the conclusion of the 2003 annual general meeting. In the event
of any such equity raising, qualifying shareholders, being shareholders on
the register at a date yet to be fixed, who duly evidence their holdings
will receive a greater allocation of shares, on a basis to be determined,
than they would otherwise have received.
Listings, dealing and settlement
Following Completion, SAB will retain its existing stock market listings,
including its listing of Ordinary Shares on the Official List of the UK
Listing Authority and on the JSE Securities Exchange South Africa.
Application has been made to the UK Listing Authority for approximately 235
million new Ordinary Shares to be admitted to the Official List and to the
London Stock Exchange for these SAB Shares to be admitted to trading on the
London Stock Exchange`s market for listed securities. Application has also
been made for approximately a further 195 million Ordinary Shares to be
admitted to the Official List, in order that Ordinary Shares arising on
conversion of the Participating Shares can be listed.
Application has also been made for the New SAB Shares to be listed with a
secondary listing on the JSE Securities Exchange South Africa.
Date: 30/05/2002 10:36:26 AM Produced by the SENS Department
