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Firm intention by SABMiller to make an offer to acquire the entire issued share capital of ABI that it does not already own

22 September 2004

SABMiller plc
(Incorporated in England and Wales)
(Registration number  3528416)
Share code: SAB
ISIN: GB0004835483
(“SABMiller”)
Amalgamated Beverage Industries Limited
(Incorporated in the Republic of South Africa)
(Registration number 1970/006820/06)
Share code: ABI
ISIN: ZAE 000000048
(“ABI”)

Firm intention by SABMiller to make an offer to acquire the entire issued share capital of ABI that it does not already own.

  1. Introduction

    Further to the announcements dated 21 July 2004 and 2 September 2004, shareholders of SABMiller and ABI are advised that SABMiller, through its wholly owned subsidiary, Other Beverage Interests (Proprietary) Limited ("OBI"), has submitted a firm intention letter to the board of directors of ABI ("ABI Board") to make an offer ("the Offer") to acquire the entire issued share capital of ABI, other than those held by ABI Holding Company (Proprietary) Limited ("ABI Holdco") for a cash consideration of 9100 cents per ABI share ("proposed acquisition").

    The proposed acquisition will be implemented by way of a scheme of arrangement ("the scheme") in terms of section 311 of the Companies Act 1973 (Act 61 of 1973), as amended ("the Act"), to be proposed by OBI between ABI and its shareholders, other than ABI Holdco ("scheme members").

  2. Rationale for the proposed acquisition

    SABMiller currently indirectly (through ABI Holdco) owns 73.5% of ABI and wishes to acquire the remaining 26.5% ABI minority shares.

    SABMiller has, in recent years, focused on its core brewing and beverage businesses, both locally and abroad, having disposed of the majority of its non-core businesses. The recent disposal of SABMiller's entire remaining interest in Edgars Consolidated Stores Limited is consistent with this strategy.

    SABMiller has also, in recent years, expanded its Coca-Cola bottling franchises elsewhere in the world and now has bottling facilities in Central America and in Africa (other than South Africa). The proposed acquisition is consistent with SABMiller's strategy of focusing on its core brewing and beverage business, and affords SABMiller the opportunity to simplify and consolidate the holding structure of its South African interests. Subject to legislative and contractual restrictions, the proposed acquisition will furthermore afford SABMiller the opportunity to investigate possible areas of synergy.

    The implementation of the proposed acquisition will have the additional benefit of removing two areas of potential conflict of interest that arise from ABI's current shareholding structure. Firstly, ABI, as a subsidiary of SABMiller, is constrained from investing in opportunities outside of South Africa. Secondly, ABI, as a subsidiary of SABMiller, is subject to certain SABMiller group borrowing restrictions, which, though a normal feature of international borrowing agreements and credit ratings, constrain ABI in optimising its capital structure.

    The cash consideration to be received by ABI shareholders represents a premium of:

    • 32.1% to the closing price of R68.90 of ABI shares on the JSE Securities Exchange South Africa ("JSE"), on Tuesday, 20 July 2004, the last trading date before the publication of the cautionary announcement referred to in 1 above; and
    • 33.9% to the price of R67.98 of ABI shares based on a 30-day volume weighted average trading price for the period preceding Wednesday, 21 July 2004.

    The scheme therefore offers the scheme participants an opportunity to realise the value of their ABI shareholdings at a substantial premium.

  3. Opinions and recommendations

    An independent committee appointed by the ABI board ("the Independent Committee") has reviewed the terms and conditions of the scheme. The Standard Bank of South Africa Limited, which was appointed by ABI as its investment bank and independent adviser, has advised the Independent Committee and the directors of ABI that it is of the opinion that the terms and conditions of the scheme are fair and reasonable. The Independent Committee is of the opinion that the terms and conditions of the scheme are fair and reasonable to shareholders. Based on the Independent Committee's recommendation, the board of directors of ABI (excluding Messrs EAG Mackay and MI Wyman who are also directors of SABMiller and OBI and Mr MJ Bowman who is an employee of SABMiller, who have accordingly recused themselves from voting) is of the opinion that the terms and conditions of the scheme are fair and reasonable to shareholders and unanimously recommends that shareholders vote in favour of the scheme.

  4. Pro forma financial effects

    The table below sets out the illustrative pro forma financial effects of the scheme on ABI shareholders assuming that the scheme had been concluded for income statement purposes from 1 April 2003 and for balance sheet purposes at 31 March 2004.

    The pro forma financial effects have been prepared for illustrative purposes only to provide information about how the scheme might have affected the financial information presented and, because of their nature, may not give a true reflection of the financial effects of the scheme:

      Before the
    scheme
    (cents per share)
    After the scheme
    (cents per share)
    % change
    Market value per share and cash received 1 6890 9100 32.08
    30-day volume weighted average market value per
    share and cash received 2
    6798 9100 33.86
    Earnings per share 3

    450

    614 36.44
    Headline earnings per share 3 507 614 21.10
    Dividend per share 4 280 614 119.29
    Net asset value per share and cash received 5 2364 9100 284.94
    Net tangible asset value per share and cash received 5 1639 9100 455.22

    Notes:

    1. The “Before the scheme” column reflects the closing JSE market value per ABI share on Tuesday, 20 July 2004, being the day immediately preceding publication of ABI's first cautionary announcement. The "After the scheme" column shows the consideration to be received per ABI share.
    2. The “Before the scheme” column reflects the 30-day volume weighted average JSE market value per ABI share calculated for the 30 days preceding Wednesday, 21 July 2004, being the day of publication of ABI's first cautionary announcement. The "After the scheme" column shows the consideration to be received per ABI share.
    3. The “Before the scheme” column reflects the audited earnings and headline earnings per share for the year ended 31 March 2004. The "After the scheme" column shows the after tax interest income that an ABI shareholder would have earned had the consideration to be received per ABI share been invested at an after-tax 12 month fixed deposit compounded interest rate of 6.75% per annum on 1 April 2003 for a period of 12 months.
    4. The “Before the scheme” column reflects the dividend distributed per share for the year ended 31 March 2004. The "After the scheme" column shows the after tax interest income that an ABI shareholder would have earned had the consideration to be received per ABI share been invested at an after-tax 12-month fixed deposit compounded interest rate of 6.75% per annum on 1 April 2003 for a period of 12 months.
    5. The "Before the scheme" column reflects the audited net asset value and net tangible asset value per share at 31 March 2004. The "After the scheme" column shows the consideration to be received per ABI share.
    6. The possible application of Capital Gains Tax has not been taken into account in the calculations above.
  5. Conditions precedent to the Offer

    The Offer is subject to the fulfilment of the following conditions precedent:

    • the approval of the scheme by all regulatory authorities if and to the extent necessary, including the South African Reserve Bank, the Securities Regulation Panel ("SRP") and the JSE;
    • the approval of the scheme by a majority representing not less than three fourths of the votes exercisable by scheme members present and voting either in person or by proxy at a meeting of scheme members;
    • the High Court of South Africa sanctioning the scheme in terms of the Act; and
    • a certified copy of the Order of Court sanctioning the scheme being registered by the Registrar of Companies in terms of the Act.

    SABMiller reserves the right to implement the Offer by other appropriate means should any of the conditions precedent not be met.

  6. SRP confirmation

    The SRP has been given appropriate confirmation (in terms of its requirements) that OBI will have sufficient cash resources available to meet its obligations in terms of the Offer.
  7. Further announcement and documentation
  8. It is currently anticipated that on or about 14 October 2004:

    • a further announcement setting out the detailed terms, salient dates and times of the scheme will be made to ABI shareholders; and
    • a circular containing the final terms of the proposed acquisition will be posted to the shareholders of ABI.

    The proposed acquisition is anticipated to be completed by mid December 2004.

Johannesburg

22 September 2004

Investment bank to OBI and SABMiller
Nedbank Capital, a division of Nedbank Limited

Sponsor to ABI and SABMiller
Cazenove South Africa (Proprietary) Limited

Attorneys to OBI and SABMiller
Werksmans Incorporated Barkers Attorneys

Tax advisers to the transaction
Webber Wentzel Bowens

Investment bank and independent adviser to ABI
The Standard Bank of South Africa Limited

Legal advisers to ABI
Routledge-Modise

Reporting accountants to ABI
Ernst and Young

This announcement does not constitute an offer to sell or issue, or the solicitation of an offer to purchase or subscribe for, any shares or other securities or a solicitation of any vote or approval in any jurisdiction in which such offer or solicitation would be unlawful.

The release, publication or distribution of this announcement in certain jurisdictions may be restricted by law and therefore persons in any such jurisdictions into which this announcement is released, published or distributed should inform themselves about, and observe, such restrictions. Any failure to comply with the applicable restrictions may constitute a violation of the securities laws of any such jurisdiction.

This announcement contains statements about Amalgamated Beverages Industries Limited ("ABI"), SABMiller plc ("SABMiller") and members of the SABMiller group (together with SABMiller, the "SABMiller Group") that are or may be forward looking statements. All statements other than statements of historical facts included in this announcement may be forward looking statements. Any statements preceded or followed by or that include the words "targets", "plans", "believes", "expects", "aims", "intends", "will", "may", "anticipates" or similar expressions or the negative thereof are forward looking statements. Forward looking statements include statements relating to the following: (i) future capital expenditures, expenses, revenues, economic performance, financial condition, dividend policy, losses and future prospects; (ii) business and management strategies and the expansion and growth of ABI's or the SABMiller Group's operations; and (iii) the effects of government regulation on ABI's or the SABMiller Group's business.

These forward looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of any such person, or industry results, to be materially different from any results, performance or achievements expressed or implied by such forward looking statements. These forward looking statements are based on numerous assumptions regarding the present and future business strategies of such persons and the environment in which each will operate in the future. All subsequent oral or written forward looking statements attributable to ABI or any member of the SABMiller Group or any persons acting on their behalf are expressly qualified in their entirety by the cautionary statement above. ABI and the SABMiller Group expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in their expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

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