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SABMiller PLC - Major Transact. in Latin Am.

RNS Number:0237P
SABMiller PLC
19 July 2005

Ref: 14/2005


Not for release, publication or distribution, in whole or in part, in or into or
from Australia, Canada or Japan


        SABMILLER and Bavaria ANNOUNCE A MAJOR TRANSACTION IN LATIN AMERICA


London and Johannesburg, 19 July 2005.  SABMiller plc ('SABMiller') announces a
major investment in Latin America through a transaction with the Santo Domingo
Group (the 'SDG') in which SABMiller will obtain a controlling interest in
Bavaria S.A. ('Bavaria') (the 'Transaction').   The Transaction will be effected
by way of a merger, and will result in the SDG owning an economic interest of
approximately 15.1% in SABMiller.  The implied equity value of Bavaria is $4.8
billion and, including net debt and minority interests, the total implied
enterprise value for 100% of the Bavaria group is approximately $7.8 billion.


Bavaria is the second largest brewer in South America with leading market
positions in Colombia (99% of the beer market), Peru (99%), Ecuador (93%) and
Panama (79%) where its key brands are Aguila, Cristal, Pilsener and Atlas,
respectively. The combined business will have annual beer volumes of
approximately 175 million hectolitres, pro forma aggregated net revenues of
approximately $12.5 billion and pro forma aggregated EBITDA of approximately
$3.5 billion.


Bavaria is highly complementary to SABMiller's existing operations and provides
access to a major additional source of profitable growth in one of the global
beer industry's most strategically important and fastest growing regions.  The
Andean region of South America is forecast to achieve a compound annual growth
rate in beer volumes of 4% over the next five years, well in excess of the
global industry average of approximately 2%.


Following the Transaction, SABMiller will have a leading position in South
America, in addition to its existing strong positions in the USA, Europe, Africa
and Asia, establishing SABMiller as a leading brewer across 5 continents.
Bavaria will further diversify SABMiller's existing portfolio of businesses and
brands in highly attractive growth markets.


SABMiller has a successful track-record and demonstrable experience in the
management of comparable operations in developing markets. It believes that the
application of its best operating practices will enable it to generate
significant earnings enhancement in Bavaria, continuing the positive revenue and
earnings momentum that Bavaria has experienced in the last several years.
SABMiller intends to reduce Bavaria's operating costs and invest in the
development of a portfolio of distinct and differentiated brands to drive
further revenue growth.


Annual cost synergies and operating improvements are estimated to reach $120
million by March 2010.  SABMiller also expects substantial profit improvements
from revenue enhancement initiatives over the same period.


On a pro forma basis, the Transaction is expected to be earnings per share
accretive, before cost and revenue synergies for the pro forma financial year
ending 31 March 2006.


The Board is confident that the IRR of the Transaction is comfortably in excess
of its cost of capital and that based upon its assumptions, the Transaction will
generate positive economic profit by the fifth or sixth full financial year of
ownership.


The Transaction


Pursuant to a merger between a subsidiary of BEVCO LLC ('BC') (the holding
company of the SDG's interest in Bavaria) and a wholly owned subsidiary of
SABMiller, SABMiller will obtain BC's indirect 71.8% interest in Bavaria and
will issue 225 million SABMiller ordinary shares (the 'Consideration Shares')
with a value of approximately $3.5 billion to the SDG based on a weighted
average US$ SABMiller share price agreed between the parties.  As a result, BC
will own an economic interest of approximately 15.1% in SABMiller  and will be
subject to a five year lock-up, subject to certain exceptions including limited
disposals from the third year.  BC will have the right to nominate two directors
for appointment to the SABMiller Board.  In addition, Alejandro Santo Domingo
and Carlos Alejandro Perez, members of the executive committee of Bavaria's
Board, will serve as Vice Chairmen of a newly created board which will have
oversight of SABMiller's operations in Latin America.


Following completion of the Transaction, SABMiller will make a cash offer to
acquire the shares held by minority public shareholders of Bavaria in Colombia,
at a price per Bavaria share of $19.48, which is the value per share that was
used as a reference for the Transaction.  SABMiller will also make a cash offer
to acquire the listed voting 'A' shares in Bavaria's subsidiary in Peru, and has
agreed to acquire for cash certain minority interests in certain other
subsidiaries.  The total cash requirement for these transactions (together the
'Minority Transactions') is estimated to be approximately $2.1 billion.


Financial information


Bavaria's turnover and EBITDA for the year ended 31 December, 2004 under
Colombian GAAP was $1,904 million and $797 million respectively.  In the first
quarter of 2005, Bavaria reported an increase in turnover of 18% to $496 million
and an EBITDA increase of 24% to US$212 million. On this basis, Bavaria's last
twelve months EBITDA to 31 March 2005 was $837 million.  Trading in the second
quarter of 2005 has been strong and Bavaria expects to show a higher year on
year growth rate than that achieved in the first quarter of the year.


On an IFRS basis, the estimated underlying EBITDA of Bavaria for the year ended
31 December 2004 was approximately $737 million.  The principal differences
between Bavaria's Colombian GAAP and IFRS EBITDA for the 2004 year relate to
reclassification of items shown as non operating costs under Colombian GAAP to
operating costs under IFRS.


As at 31 December 2004 Bavaria had gross assets of approximately $5.2 billion,
profit before tax of $430 million and net debt of $1.9 billion on an IFRS basis.
  The combined business will have a strong balance sheet with an estimated pro
forma net debt to aggregated EBITDA ratio of approximately 1.8 times, supported
by strong cash flow generation.


Commenting on the Transaction, Graham Mackay, Chief Executive of SABMiller,
said:


'We are excited by the enhanced prospects for growth, in a strategically
important market, which the combination with Bavaria brings.  We are confident
that together the business will generate considerable benefits for all
stakeholders.


'We are delighted to welcome the Santo Domingo Group and the management and
employees of Bavaria to the SABMiller group.  I believe that they will provide a
significant contribution to the future success of SABMiller.  Through this
transaction, we will be one of the largest international investors in the Andean
region, and we look forward to playing an important role in the welfare of these
local communities.'


Commenting on the Transaction, Julio Mario Santo Domingo, Chairman of Bavaria
said:


'We are enthusiastic about joining forces with SABMiller.  SABMiller has an
excellent strategy and a strong management team with a demonstrated track record
for creating shareholder value, through continued growth and increasing
profitability in both developing and developed markets.

'The Bavaria management team and all the employees at Bavaria deserve credit and
acknowledgement for their successful transformation of the company into the
second largest brewer in South America.

'We are particularly proud of the fact that, for the first time, Colombian
interests will have such an important role in a company of the size and
magnitude of SABMiller and that SABMiller will establish their South American
regional headquarters in Bogota.'


The Transaction is conditional upon the approval of SABMiller's shareholders and
upon there having been no material adverse change in the businesses of Bavaria
or SABMiller.  A circular is expected to be posted to shareholders within three
to four months and, if approved by shareholders, completion of the Transaction
will follow within two business days of the Extraordinary General Meeting.


Altria, SABMiller's largest shareholder with 24.99% of the current voting rights
in SABMiller, is fully supportive of the Transaction.


Merrill Lynch is acting as financial adviser to SABMiller.  JPMorgan Cazenove is
acting as corporate broker and provided certain other advice to the Company.
Merrill Lynch is acting as joint corporate broker to the Transaction.


Lehman Brothers, Morgan Stanley and Citigroup are acting as financial advisers
to BC.  Citigroup, Lehman Brothers and Morgan Stanley are acting as financial
advisers to SDG.


This summary should be read in conjunction with the full text of the following
announcement.


This announcement, a copy of the slide presentation and video interviews with
management, including SABMiller Chief Executive, Graham Mackay, are available on
the SABMiller website at www.sabmiller.com and at www.cantos.com, also available
in audio and full transcript.


There will be an analyst presentation beginning at 10.00 am BST  in the
Auditorium, Merrill Lynch Financial Centre, 100 Newgate Street, London.  In
Johannesburg there will be a video link to the presentation in London (11.00 am
local time) in the Jacaranda Room, Intercontinental Sandton Sun and Towers,
Fifth Street, Sandown, Sandton.  The live webcast of the presentation will be
available on www.sabmiller.com in both English and Spanish languages.


Analyst presentation dial-in (allowing participation in Q&A) : +44 20 7365 1856,
access code: 5634297£

Replay facility: +44 20 7784 1024, access code: 5634297£ (available for 7 days).


For the Americas, there will be an analyst audio webcast at 10:00 EDT with a
conference call allowing participation in Q&A. This audio webcast will be
available on www.sabmiller.com.


Americas presentation dial-in (allowing participation in Q&A): +1 718 354 1172,
access code: 'SABMiller'

Replay facility: +1 718 354 1112, access code: 8724794 (available for 7 days).


Both presentations will also be webcast live on www.sabmiller.com.


For further information, please contact:


SABMiller plc                                           Tel:  +44 20 7659 0100

Sue Clark        Director of Corporate Affairs          Mob: +44 7850 285471
Gary Leibowitz   Vice President, Investor Relations     Mob: +44 7717 428540
Nigel Fairbrass  Head of Media Relations                Mob: +44 7799 894265


Maitland

Philip Gawith                                           Tel: +44 20 7379 5151
Suzanne Bartch


Merrill Lynch                                           Tel: +44 20 7628 1000

Simon Mackenzie-Smith    Managing Director
Federico Aliboni         Managing Director
Mark Astaire             Managing Director (Corporate Broking)


JPMorgan Cazenove (Corporate broker)                    Tel: +44 20 7588 2828
David Mayhew           Chairman
Ian Hannam             Managing Director
Arjun Khullar          Director


High resolution images are available for the media to view and download free of
charge from www.vismedia.co.uk.  B-roll material will be made available free of
charge at 07:15 GMT to 07:30 GMT and also 14:00 GMT to 14:15 GMT on APTN Global
Video Wire. B-roll material will also be made available via BT Tower FL / PUF 29
at 07:15 GMT to 07:30 GMT.


This announcement has been issued by SABMiller and is the sole responsibility of
SABMiller.


Merrill Lynch is acting for SABMiller in connection with the proposed
transaction and no one else and will not be responsible to anyone other than
SABMiller for providing the protections afforded to clients of Merrill Lynch nor
for providing any advice in relation to the transaction.


JPMorgan Cazenove is acting for SABMiller in connection with the proposed
transaction and no one else and will not be responsible to anyone other than
SABMiller for providing the protections afforded to clients of JPMorgan Cazenove
nor for providing any advice in relation to the transaction.


Lehman Brothers, Morgan Stanley and Citigroup are acting for BC in connection
with the proposed transaction and no one else and will not be responsible to
anyone other than BC for providing the protections afforded to clients of Lehman
Brothers, Morgan Stanley and Citigroup, or for providing any advice in relation
to the transaction.  Citigroup, Lehman Brothers and Morgan Stanley are acting
for SDG in connection with the proposed transaction and no one else and will not
be responsible to anyone other than SDG for providing the protections afforded
to clients of Citigroup, Lehman Brothers and Morgan Stanley, or 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 SABMiller securities in any jurisdiction.


The distribution of this announcement may be restricted by law. Persons into
whose possession this announcement comes are required by SABMiller to inform
themselves about and to observe any such restrictions.


This announcement includes 'forward-looking statements'. These forward-looking
statements contain the words 'anticipate', 'believe', 'intend', 'estimate', '
expect' and words of similar meaning. All statements other than statements of
historical facts included in this announcement, including, without limitation,
those regarding SABMiller's financial position, business strategy, plans and
objectives of management for future operations (including development plans and
objectives relating to SABMiller'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 SABMiller 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 SABMiller's present and future business
strategies and the environment in which SABMiller will operate in the future.
These forward-looking statements speak only as at the date of this announcement.
SABMiller expressly disclaims any obligation or undertaking to disseminate any
updates or revisions to any forward-looking statements contained herein to
reflect any change in SABMiller's expectations with regard thereto or any change
in events, conditions or circumstances on which any such statement is based.


      SABMILLER AND BAVARIA ANNOUNCE A MAJOR TRANSACTION IN LATIN AMERICA


Introduction


SABMiller has entered into a transaction with the SDG through which SABMiller
will obtain a controlling interest in Bavaria through a merger. As a result, BC
will own an economic interest of approximately 15.1% in SABMiller and will be
subject to a five year lock-up, subject to certain exceptions including limited
disposals from the third year.


Bavaria is the second largest brewer in South America with leading market
positions in Colombia (99% of the beer market), Peru (99%), Ecuador (93%) and
Panama (79%). The company also operates a malt plant in Chile and produces
beverages in Bolivia and Costa Rica.


Bavaria's turnover and EBITDA for the year ended 31st December, 2004 under
Colombian GAAP was $1,904 million and $797 million respectively.  Bavaria is
listed on the Colombian Stock Exchange and also has listed subsidiaries in Peru
and Ecuador.


Terms of the Transaction


SABMiller and BC entered into an agreement and plan of merger (the 'Merger
Agreement') on 18 July 2005, under which a wholly owned subsidiary of SABMiller
will be merged with a subsidiary of BC under Delaware law and will thereby
obtain BC's indirect 71.8% interest in Bavaria.  In return, SABMiller will issue
to BC 225 million new ordinary shares, representing an economic interest of
approximately 15.1% in SABMiller.  Based on SABMiller's historical average share
price and the weighted average £/$ exchange rate over the period agreed between
the parties, the value of the SDG stake is approximately $3.5 billion.


Following completion of the Transaction, SABMiller will make a cash offer to
acquire all the shares held by minority public shareholders of Bavaria in
Colombia at a price per Bavaria share of $19.48 ('the Colombian Minority Offer
'), which is the value per share that was used as a reference for the
Transaction.  Assuming a 100% acceptance for the Colombian Minority Offer, the
total cash requirement is estimated to be approximately $1.4 billion.  SABMiller
has entered into agreements with Bavaria minority shareholders holding
approximately 3.7% of the shares in Bavaria, pursuant to which they have
undertaken to accept the Colombian Minority Offer in respect of their
shareholdings.  In addition, SABMiller will acquire the outstanding minority
interest in Cerveceria Leona S.A. ('Leona'), a subsidiary in Colombia, for $176
million in cash on completion.


SABMiller will also make a cash offer to acquire the listed voting 'A' shares in
Bavaria's subsidiary in Peru,  U.C.P. Backus y Johnston S.A.A. ('B&J')
representing the remaining 24% of the voting interest of B&J and the minority
interests of its listed subsidiaries in Ecuador ('the Peru and Ecuador Offers').
SABMiller has entered into an agreement with a major shareholder owning 24% of
the listed voting 'A' shares in B&J, pursuant to which they have undertaken to
accept the offer in respect of its shareholdings for $470 million in cash.
SABMiller has estimated that, assuming a 100% acceptance for the Peru and
Ecuador Offers, the total cash requirement for the Peru and Ecuador Offers is
approximately $555 million.


As of Monday, 18 July 2005, the last practicable date before this announcement,
the implied value of 100% of the equity of Bavaria was approximately $4.8
billion.  Including net debt of approximately $1.9 billion as at 31 December
2004 and minority interests of $1.0 billion, the total implied enterprise value
for the full economic interest in Bavaria and all of its subsidiaries and
associates, is approximately $7.8 billion.


The Transaction is conditional upon the approval of SABMiller's shareholders and
upon there having been no material adverse change in the businesses of Bavaria
or SABMiller. A circular is expected to be posted to shareholders within three
to four months and, if approved by shareholders, completion of the Transaction
will follow within two business days of the Extraordinary General Meeting.


Rationale for the Transaction


Bavaria is the second largest brewer in South America with leading market
positions in Colombia, Peru, Ecuador and Panama. The company also operates a
malt plant in Chile and produces beverages in Bolivia and Costa Rica.


Since 2001, Bavaria has executed a successful international expansion program
that has culminated in the consolidation of its leadership positions in the
Andean region. This strategy, combined with a strong emphasis in adopting best
practices and focusing on the consumer and their needs, has increased Bavaria's
EBITDA from $262 million in 2000 to $797 million in 2004 and has positioned
Bavaria to continue to generate strong sales and earnings growth.


Bavaria is highly complementary to SABMiller's existing operations and provides
access to a major additional source of profitable growth in one of the
industry's most strategically important and fastest growing regions. The Andean
region of South America is forecast to achieve a compound annual growth rate in
beer volumes of 4% over the next five years, well in excess of the global
industry average of approximately 2%, based on population growth, attractive
demographics and economic growth, which will drive improvements in per capita
consumption.   The addition of Bavaria's highly attractive growth markets to
SABMiller's existing portfolio will diversify the company's revenues and
earnings.


SABMiller has a successful track-record and demonstrable experience in the
management of comparable operations in developing markets. It believes that the
application of its best operating practices will enable it to generate
significant earnings enhancement in Bavaria, continuing the positive revenue and
earnings momentum that Bavaria has experienced in the last several years.
SABMiller intends to reduce Bavaria's operating costs and invest in the
development of a portfolio of distinct and differentiated brands to drive
further revenue growth.


Annual cost synergies and operating improvements are estimated to reach $120
million by March 2010.  SABMiller also expects substantial profit improvements
from revenue enhancement initiatives over the same period.


Overview of Bavaria


Bavaria, with beer and malt beverage volumes of 28.6 million hectolitres for the

fiscal year ended 31 December 2004, is the second largest brewer in South
America, as well as being the largest brewer in the Andean region.  Bavaria
operates 16 breweries, and enjoys significant market shares in each of its
countries of operation: Colombia (99%), Peru (99%), Ecuador (93%) and Panama
(79%).  The strength of these market shares is supported by established local
brands, a well-invested production base and efficient distribution networks.
Bavaria's key brands include Aguila, Cristal, Pilsener and Atlas, which are
market leaders in these respective countries.  In addition to its brewing
interests, in the fiscal year 2004 Bavaria produced 5.7 million hectolitres of
water, juices, soft drinks and milk.


Bavaria is listed on the Colombian Stock Exchange.


In addition to its own brewing operations in Colombia, Bavaria has a number of
controlling interests in the region, including a 69% interest in Leona
(Colombia), a 76% voting interest and a 42% economic interest in publicly-listed
B&J (Peru), a 94% interest in Compania de Cervezas Nacionales C.A. ('CCN') and a
74% interest in Cerveceria Andina S.A. ('Andina') (Ecuador), and a 92% interest
in Cerveceria Nacional S.A. ('CNP') (Panama).  Following completion of the
Colombian Minority Offer and the Peru and Ecuador Offers  (if all are accepted
in full) and other minority acquisitions, SABMiller will have a 100% interest in
Bavaria and in Leona, a 100% voting interest and a 57% economic interest in B&J,
a 100% interest in CCN and Andina, and a 92% interest in CNP.


Financial information


Bavaria's turnover and EBITDA for the year ended 31 December, 2004 under
Colombian GAAP was $1,904 million and $797 million respectively.  In the first
quarter of 2005, Bavaria reported an increase in turnover of 18% to $496 million
and an EBITDA increase of 24% to US$212 million. On this basis, Bavaria's last
twelve months EBITDA to 31 March 2005 was $837 million.  Trading in the second
quarter of 2005 has been strong and Bavaria expects to show a higher year on
year growth rate than that achieved in the first quarter of the year.


On an IFRS basis, the estimated underlying EBITDA of Bavaria for the year ended
31 December 2004 was approximately $737 million.  The principal differences
between Bavaria's Colombian GAAP and IFRS EBITDA for the 2004 year relate to
reclassification of items shown as non operating costs under Colombian GAAP to
operating costs under IFRS.


As at 31 December 2004 Bavaria had gross assets of approximately $5.2 billion,
profit before tax of $430 million and net debt of $1.9 billion on an IFRS basis.
  The combined business will have a strong balance sheet with an estimated pro
forma net debt to aggregated EBITDA ratio of approximately 1.8 times, supported
by strong cash flow generation.


Adding value to Bavaria


The board of SABMiller believes that the strengths of Bavaria and the beer
markets of the Andean region can be further developed through the introduction
of SABMiller's best operating practices and management skills.  SABMiller's
record in developing and managing businesses in high growth emerging markets and
of successfully introducing best operating practices should create opportunities
for increased value creation in Bavaria.


SABMiller expects to improve Bavaria's performance through the following
initiatives:


*            Category leadership


Generate sustained per capita consumption growth through rejuvenation of brand
identities and packaging, curtailed price increases, upgrade of returnable
container population and significant increase in marketing investment.


*            Brand portfolio development


Develop a balanced portfolio of distinct and differentiated brands at price
points that capture perceived consumer value.  Specifically, expand the
worthmore segment through the introduction of premium brands and packs.


*            Channel marketing management


Increase channel effectiveness through the tailoring of marketing and sales
activities by retail channels segmented and prioritised according to consumer
profile and consumption behaviour.


*            Pricing management


Differentiate pricing by channel, pack and geography, leveraging greater
understanding of price and income elasticities.


*            Operational efficiencies


Reduce both variable and fixed costs through improved operational efficiencies
and procurement arising from the introduction of SABMiller's best operating
practices.


Strategic Fit


In addition to the positive characteristics of the existing Bavaria business and
the opportunity to further improve Bavaria's business performance, the
Transaction brings other significant benefits to SABMiller:


*            Provides additional leading positions in fast-growing markets


Over the period 2006 to 2010, it is estimated that 68% of the world volume
growth of beer consumption will be driven by 12 key countries (including
Colombia). SABMiller currently has an 11% share of these countries. Following
the Transaction, this share will increase to close to 13%.


*            Establishes SABMiller as the second largest brewer in South America


The merger with Bavaria, added to SABMiller's existing Central American
operations, provides a strong platform from which to exploit growth
opportunities across both the beer and soft drinks markets.


*            Enhances SABMiller's geographical diversification


Bavaria provides a further profit pool to diversify SABMiller's operating
profile.  Following the Transaction, Latin America will account for 21% of the
enlarged group's proforma EBITA compared with 34% in South Africa, 16% in the
USA, 13% in Africa and Asia and 16% in Europe.


*                     Enhances SABMiller's earnings per share


On a pro forma basis, the Transaction is expected to be earnings per share
accretive, before cost and revenue synergies for the pro forma financial year
ending 31 March 2006.


The Board is confident that the IRR of the Transaction is comfortably in excess
of its cost of capital and that based upon its assumptions, the Transaction will
generate positive economic profit by the fifth or sixth full financial year of
ownership.


Management and Integration


The SABMiller regional headquarters will be in Bogota, Colombia.  Barry Smith, a
senior member of SABMiller's executive team will be appointed to head the
regional group. Mr Smith is currently an Executive Vice President at the Miller
Brewing Company and was previously Managing Director of SABMiller's business in
Poland.


Alejandro Santo Domingo and Carlos Alejandro Perez, members of the executive
committee of Bavaria's Board, will serve as Vice Chairmen on a newly created
board which will have oversight of SABMiller's operations in Latin America,
bringing further experience and local knowledge to SABMiller's management team.


Information on SABMiller


SABMiller is one of the world's largest brewers with 2004/5 lager sales volumes
in its financial year ended 31 March 2005 in excess of 148 million hectolitres,
and has a brewing presence in over 40 countries across four continents, a
portfolio of strong brands and leading market shares in many of the countries in
which it has brewing operations.  Outside the USA, SABMiller is one of the
largest bottlers of Coca-Cola products in the world.


In the year ended 31 March 2005, the group generated $2,194 million pre-tax
profit from a turnover of $14,543 million.  SABMiller plc is listed on the
London and Johannesburg stock exchanges.


Agreements


Summary of the principal terms of the Merger Agreement


SABMiller and BC entered into an agreement and plan of merger (the 'Merger
Agreement') on 18 July 2005, under which a wholly owned subsidiary of SABMiller
will be merged with a subsidiary of BC and will thereby obtain control over
71.8% of Bavaria, in consideration for which SABMiller will issue to BC 225
million new ordinary shares in SABMiller, representing an economic interest of
approximately 15.1% in SABMiller.


Completion of the Transaction is conditional on the approval of SABMiller's
shareholders, and on there having been no material adverse change in the
businesses of SABMiller or of Bavaria between the date of the Merger Agreement
and completion.


BC has given a range of warranties and indemnities to SABMiller in respect of
Bavaria and its subsidiaries and their businesses which are conventional for a
transaction of this nature, and SABMiller has given a similar but less extensive
range of warranties concerning SABMiller's business.  Bavaria and SABMiller will
conduct their businesses in the ordinary course between signing and completion,
and SABMiller will be consulted by BC on all major business decisions and
developments during this period.


SABMiller has agreed that if the Transaction is not approved by SABMiller
shareholders, SABMiller will pay to BC an amount equal to up to $20 million as
reimbursement for fees and expenses of BC and its direct and indirect affiliates
in connection with this Transaction.  A fee of $100 million (less any amounts
paid pursuant to the reimbursement of expenses) will be paid if the Transaction
is not approved by SABMiller's shareholders in circumstances where, before the
SABMiller Extraordinary General Meeting, any person has made an offer for
SABMiller, or has proposed any other business transaction or combination
involving SABMiller which is conditioned upon the Transaction not being
completed or if SABMiller's board of directors withdraws or modifies its
recommendation to SABMiller's shareholders to vote for the Transaction.


Following completion of the Transaction, SABMiller will make a cash offer to
acquire all the shares held by minority public shareholders of Bavaria in
Colombia at a price per Bavaria share of $19.48, which is the value per share
that was used as a reference for the Transaction.  Assuming a 100% acceptance
for the Colombian Minority Offer, the total cash requirement is estimated to be
approximately $1.4 billion.  SABMiller has entered into agreements with Bavaria
minority shareholders holding approximately 3.7% of the shares in Bavaria,
pursuant to which they have undertaken to accept the Colombian Minority Offer in
respect of their shareholdings.  In addition, SABMiller will acquire the
outstanding minority interest in Leona for $176 million in cash on completion.


SABMiller will also make a cash offer to acquire the listed voting A shares in
Bavaria's subsidiary in B&J, representing a 24% voting interest in B&J, and the

minority interests of its listed subsidiaries in Ecuador ('the Peru and Ecuador
Offers').  SABMiller has entered into an agreement with a major shareholder
owning 24% of the listed voting 'A' shares in B&J, pursuant to which it has
undertaken to accept the offer in respect of its shareholdings for $470 million
in cash.  SABMiller has estimated that, assuming a 100% acceptance for the Peru
and Ecuador Offers, the total cash requirement for these transactions is
approximately $555 million.


As of Monday, 18 July 2005, the last practicable date before this announcement,
the implied value of 100% of the equity of Bavaria was $4.8 billion.  Including
net debt of approximately $1.9 billion as at 31 December 2004 and minority
interests of $1.0 billion, the total implied enterprise value for the full
economic interest in Bavaria and all of its subsidiaries and associates, is
approximately $7.8 billion.


Summary of the principal terms of the Relationship Agreement


BC and SABMiller will enter into a relationship agreement (the 'Relationship
Agreement') at completion, under which BC:


*                     will have the right to nominate two representatives as
non-executive directors of SABMiller, subject to the level of its economic
interest in SABMiller and the retention of its Consideration Shares;

*                     will agree not to sell any shares in SABMiller for a five
year period, subject to certain exceptions, including the right to sell
one-fifth of BC's shareholding in any rolling twelve month period for the third
to the fifth years of the five year period, subject to orderly market
arrangements (which also apply to all other permitted disposals);

*                     will not have its ownership transferred out of the SDG;

*                     will agree to appropriate worldwide non-compete
restrictions in the beverage sector; and

*                     will be offered appropriate regional and in-country
non-executive roles for key members of the SDG.


The lock up provisions in the Relationship Agreement may give rise to a deemed
concert party between BC and persons connected with BC on the one hand, and
SABMiller, and the board of SABMiller and persons connected with them on the
other hand.  Accordingly, the Relationship Agreement will provide that if
circumstances arise where any interest in shares in SABMiller is acquired by
SABMiller or persons connected with SABMiller, such that (when taken together
with the shares in SABMiller in which SABMiller and persons connected with
SABMiller are then interested aggregated with the shares in SABMiller then held
by BC and persons connected with BC) the aggregate voting interest of all those
persons exceeds 29.99%, the lock up restrictions described above will cease to
apply.  There is no formal or informal agreement or relationship existing
between Altria and BC in relation to SABMiller.  BC has also undertaken in the
Relationship Agreement not to enter into any agreement or undertaking (whether
formal or informal) with any party as a result of which BC, or any person acting
in concert with BC, shall become obliged to make any mandatory offer for
SABMiller or shall become, or shall be deemed to be, acting in concert.


The Relationship Agreement has no fixed term, but ceases to apply if BC no
longer has the right to nominate any representatives as non-executive directors
of SABMiller.


Board of Directors


If BC exercises its right to nominate two directors for appointment to the board
of SABMiller, the composition of the Board will no longer be in compliance with
the requirements of the Combined Code, because a majority of non-executive
directors of SABMiller will not be 'independent' for the purposes of the
Combined Code.  SABMiller believes that this departure from the Combined Code is
justified in light of the strategic importance of the Transaction.


Regional Board and Management Team


SABMiller intends to establish a regional Board to discuss strategic and key
operating issues relating to SABMiller Latin America, the consolidated results
of the SABMiller Latin America group and to explore and evaluate consolidation
opportunities in the beverage sector.  BC will have two representatives as Vice
Chairmen on this regional Board, which will be chaired by the Chief Executive of
SABMiller.  In addition, BC will nominate two directors for appointment to the
board of Bavaria in Colombia, who will be elected as Chairman and Vice Chairman,
and there may be representation on the country Boards, where appropriate.  The
SDG will therefore continue to play a key role in the development of the
business on an ongoing basis.


Financial reporting


SABMiller will continue to publish financial statements denominated in US
dollars and prepared in accordance with IFRS. The financial year-end will
continue to be 31 March.  SABMiller's interim results prepared in accordance
with IFRS for the first six months of 2005, are due to be announced in November
2005.  Bavaria is expected to publish its 2005 first half results in Colombian
GAAP on or around 29 July 2005.


Employees


SABMiller and Bavaria currently employ approximately 52,000 people in aggregate
worldwide.


SABMiller believes that its people are its enduring advantage and has well
developed strategic people resourcing capabilities and organisational practices.
  These include performance management processes that ensure clear alignment
with strategy and encourage employee accountability.  SABMiller is committed to
developing its people and providing opportunities for advancement.


The existing employment terms and conditions, including pension rights, of
Bavaria's employees, will be appropriately safeguarded. Both SABMiller and
Bavaria will continue to inform and, where appropriate, consult with relevant
employee organisations regarding the Transaction in accordance with applicable
legal and contractual requirements.


SABMiller recognizes that operating in a socially and environmentally
responsible manner is both an ethical duty and a key to sustained growth and
superior shareholder returns. The development and welfare of its people and the
communities in which it operates is therefore central to SABMiller's philosophy.


Altria


Altria, SABMiller's largest shareholder with 24.99% of the current voting rights
in SABMiller, is fully supportive of the Transaction.


As part of the Transaction, a number of modifications and conforming amendments
are proposed to be made to the existing relationship agreement between SABMiller
and Altria which was entered into at the time of the acquisition by SABMiller of
Miller Brewing Company on 9 July 2002.  This will be the subject of a separate
resolution which will be proposed at the Extraordinary General Meeting to
approve the Transaction, and on which Altria, as a related party of SABMiller,
will not vote.


Listings, dealing and settlement


Following Completion, SABMiller 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.


Applications will be made for the new ordinary shares in SABMiller to be
admitted to the Official List and to trading on the London Stock Exchange's
market for listed securities, and to be listed on the JSE Securities Exchange
South Africa.


This announcement has been issued by SABMiller and is the sole responsibility of
SABMiller.


Merrill Lynch is acting for SABMiller in connection with the proposed
transaction and no one else and will not be responsible to anyone other than
SABMiller for providing the protections afforded to clients of Merrill Lynch nor
for providing any advice in relation to the transaction.


JPMorgan Cazenove is acting for SABMiller in connection with the proposed
transaction and no one else and will not be responsible to anyone other than
SABMiller for providing the protections afforded to clients of JPMorgan Cazenove
nor for providing any advice in relation to the transaction.


Lehman Brothers, Morgan Stanley and Citigroup are acting for BC in connection
with the proposed transaction and no one else and will not be responsible to
anyone other than BC for providing the protections afforded to clients of Lehman
Brothers, Morgan Stanley and Citigroup, or for providing any advice in relation
to the transaction.  Citigroup, Lehman Brothers and Morgan Stanley are acting
for SDG in connection with the proposed transaction and no one else and will not
be responsible to anyone other than SDG for providing the protections afforded
to clients of Citigroup, Lehman Brothers and Morgan Stanley, or 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 SABMiller securities in any jurisdiction.


The distribution of this announcement may be restricted by law. Persons into
whose possession this announcement comes are required by SABMiller to inform
themselves about and to observe any such restrictions.


This announcement includes 'forward-looking statements'. These forward-looking
statements contain the words 'anticipate', 'believe', 'intend', 'estimate', '
expect' and words of similar meaning. All statements other than statements of
historical facts included in this announcement, including, without limitation,
those regarding SABMiller's financial position, business strategy, plans and
objectives of management for future operations (including development plans and
objectives relating to SABMiller'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 SABMiller 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 SABMiller's present and future business
strategies and the environment in which SABMiller will operate in the future.
These forward-looking statements speak only as at the date of this announcement.
SABMiller expressly disclaims any obligation or undertaking to disseminate any

updates or revisions to any forward-looking statements contained herein to
reflect any change in SABMiller's expectations with regard thereto or any change
in events, conditions or circumstances on which any such statement is based.


                      This information is provided by RNS
            The company news service from the London Stock Exchange
END

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Share price data provided by vwd group & financial data provided by Morningstar.