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SABMiller plc proposal to acquire Foster’s Group Limited

21 June 2011

SABMiller plc ("SABMiller") notes the announcement today by Foster's Group Limited ("Foster's") and confirms that it has made a non-binding, conditional proposal to the Board of Directors of Foster's to acquire all of Foster's shares for A$4.90 per fully paid share1 in cash.

The proposal to acquire Foster's is in line with SABMiller's strategy to create an attractive global spread of businesses, with a focus on developing strong and successful brand portfolios.  Australia has a strong, wealthy and growing economy with consistent long term population growth in key demographics, and is well positioned to benefit from continued economic growth in Asia.  Australia has a profitable beer market in which Foster's is the leading brewer with 7 of the top 10 beer brands2, a national distribution platform and scale production.

SABMiller has a proven track record of integrating brewing companies and improving the operating and financial performance of acquired businesses.  SABMiller would use its expertise, best operating practices, management experience and global scale to enhance Foster's leadership position, strengthen and develop Foster's brand portfolio and improve Foster's operations and profitability.

The SABMiller proposal was sent to the Chairman of Foster's on 20 June 2011 with the objective of reaching agreement on the implementation of a scheme of arrangement.  The proposal is subject to a number of conditions including satisfactory due diligence, agreeing the terms and conditions of a scheme implementation agreement and Foster's board support.

SABMiller believes its proposal, which represents an enterprise value for Foster's of A$11.2 billion3 and a F11 forecast EV/EBITDA4 multiple of 12.5 times, is attractive to Foster's shareholders.  The price represents a significant premium of 14.5% to the trading price of Foster's of A$4.28 as at 2 June 2011 (being the closing price prior to the most recent round of speculation of a bid for the company) and with a significant premium of 18.4% to the adjusted closing price5 of Foster's shares as at 25 May 2010 of A$4.14 (being the adjusted last closing price prior to the announcement of Foster's intention to evaluate a demerger).

The proposal consideration is all cash, providing certain value at closing for Foster's shareholders, and would be financed from SABMiller's existing resources and new debt facilities.  SABMiller is in a position to conclude an agreed transaction quickly.

As previously announced by Coca-Cola Amatil Limited to the Australian Securities Exchange, SABMiller has separately reached agreement with Coca-Cola Amatil Limited to acquire its share of the Pacific Beverages Pty Limited joint venture should SABMiller acquire a controlling interest in Foster's.

Commenting on the proposal, SABMiller Chief Executive Officer Mr. Graham Mackay said:

"SABMiller has a proven track record of acquiring and integrating brewing companies in a way which benefits shareholders, employees, business partners and the broader community.

"We aim to strengthen the Foster's brand portfolio and work with the local team to bring our innovation, global scale and expertise to the business.

"We continue to believe that the proposal price is attractive and offers good value to Foster's shareholders. SABMiller can conclude a transaction quickly and will continue to seek engagement with the Board of Foster's to put an agreed proposal to Foster's shareholders."

Ends

Webcast and conference call


A live audio webcast of a presentation to investors hosted by Graham Mackay, Chief Executive  will begin at 9 am London time / 6 pm Sydney time on 21 June 2011. 

A listen-only conference call of the live webcast is available on Tel: +44 20 8515 2383 - access code: 4909#.

A conference call replay facility will be available one hour after the webcast on Tel: +44 20 7154 2833 - conference ID 127191#
 
Supporting media materials

An interview with SABMiller Chief Executive, Graham Mackay, is available to view and download at www.sabmiller.com/broadcastfootage

For a large selection of print quality images visit www.sabmiller.com/imagelibrary

Enquiries

SABMiller Media Relations
Nigel Fairbrass / Beth Longcroft
Tel: +44 20 7659 0115 / Tel: +44 20 7659 0172

SABMiller Investor Relations
Gary Leibowitz / Henry Rudd
Tel: +44 20 7659 0119 / Tel: +44 20 7659 0159

Financial Dynamics - UK
John Waples: +44 7717 814 520
Jonathon Brill: +44 7836 622 683

Financial Dynamics - Australia
Jim Kelly: +61 412549083
Lauren Thompson: +61 438954729

Advisers

SABMiller has retained J.P. Morgan, Moelis & Company, RBS and Morgan Stanley as financial advisers and Allen & Overy and Hogan Lovells International LLP as legal advisers.

About SABMiller plc

SABMiller plc is one of the world's largest brewers with brewing interests and distribution agreements across six continents. The group's wide portfolio includes global brands such as Pilsner Urquell, Peroni Nastro Azzurro, Miller Genuine Draft and Grolsch, as well as leading local brands such as Aguila, Castle, Miller Lite, Snow and Tyskie. SABMiller plc is also one of the world's largest bottlers of Coca-Cola products.

In the year ended 31 March 2011, the group reported US$5,617 million adjusted EBITDA6 and group revenue of US$28,311 million.  SABMiller plc is listed on the London and Johannesburg stock exchanges and has an American Depositary Receipt programme sponsored by the Bank of New York Mellon.

About Foster's

Foster's is the leader in the Australian beer market with 30 June 2010 EBITDA of A$948 million and net sales revenue of A$2,395 million. The company has a portfolio of well established brands including VB, Carlton Draught, Corona, Crown Lager, Pure Blonde, Carlton Mid and Carlton Dry.  Foster's is also the largest cider producer in Australia.  Foster's is listed on the Australian Securities Exchange.


Notes

  1. Subject to adjustment for any dividends or distributions
  2. Source: Foster's Demerger Scheme Booklet
  3. Assumes 1,942.8 million Foster's shares based on the fully paid shares in issue per Appendix 3B dated 10 May 2011 (1,940.9 million) plus maximum Long Term Incentive Plan (LTIP) shares to be issued at 30 June 2010 as per Foster's 2010 Annual Report (2.3 million), less the LTIP shares issued since 30 June 2010 per appendix 3Bs (0.4 million) plus net debt of A$1.883bn less ATO receivable of A$257m (Source: Foster's Demerger Scheme Booklet) plus book value of minorities of A$17m (Source: Foster's December 2011 Half Year Results)
  4. F11 EBITDA is calculated as the median F11 EBITDA forecast in the 8 brokers' reports on Foster's providing EBITDA forecasts which were published after 17 March 2011 (the date of release of the Foster's Demerger Scheme Booklet) and were available to SABMiller as at the date of this announcement.  For three of the broker sources used, SABMiller has adjusted the published EBITDA forecast to include associate income (which was excluded in the EBITDA figures published in those reports).  The brokers' F11 EBITDA forecasts (adjusted as described above) range from A$878 million to A$909 million with a median of A$896 million
  5. Foster's closing share price on 25 May 2010 of A$5.15 adjusted by a factor of 0.804745 (Source: FactSet) to reflect the demerger of Treasury Wine Estates Limited.  Adjustment factor based on the opening price of Treasury Wine Estates Limited on the first day of trading post demerger and the last closing price of Foster's pre-demerger
  6. Defined as EBITDA before cash flows from exceptional items plus dividends received from MillerCoors

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