8-KOther Events

ALTRIA GROUP, INC. 8-K Report (May 30, 2002)

Filed May 30, 2002For Securities:MO

Summary

Philip Morris Companies Inc. (now Altria Group, Inc.) announced a significant strategic transaction on May 30, 2002, agreeing to merge its Miller Brewing Company subsidiary with South African Breweries plc (SAB). This merger will create SABMiller plc, which is set to become the world's second-largest brewer with pro forma revenues of approximately $9.3 billion. Philip Morris will retain a substantial 36% economic interest in the new entity, SABMiller, and will receive approximately $1.7 billion in cash from the assumption of Miller's debt. This cash infusion is earmarked to accelerate Philip Morris' share repurchase program for 2002. The transaction is strategically important for both parties, providing SABMiller with a significant foothold in the highly profitable U.S. beer market and a global footprint, while Philip Morris gains a substantial stake in a leading global beverage company. The deal is expected to be largely neutral to Philip Morris' earnings per share in the short term, with a one-time pre-tax gain of approximately $3 billion anticipated in the third quarter of 2002.

Key Highlights

  • 1Philip Morris Companies Inc. to merge its Miller Brewing Company with South African Breweries plc to form SABMiller plc.
  • 2The combined entity, SABMiller plc, will be the world's second-largest brewer with pro forma revenues of $9.3 billion.
  • 3Philip Morris will hold a 36% economic interest in the new company, SABMiller plc.
  • 4Philip Morris will receive approximately $1.7 billion in cash from the assumption of Miller Brewing Company's debt.
  • 5The cash received will be used to accelerate Philip Morris' share repurchase program in 2002.
  • 6The transaction is expected to result in a one-time pre-tax gain of approximately $3 billion for Philip Morris in Q3 2002.
  • 7Philip Morris will receive three seats on the SABMiller Board of Directors and has agreed to a holding period for its shares until June 30, 2005.

Frequently Asked Questions

This 8-K filing announces a major agreement by Philip Morris Companies Inc. to merge its wholly-owned subsidiary, Miller Brewing Company, with South African Breweries plc, creating a new global brewing giant named SABMiller plc.

Philip Morris Companies Inc. will hold a 36% economic interest in the newly formed SABMiller plc. They will also have a total voting interest of 24.99% and will be entitled to three seats on the SABMiller Board of Directors.

Philip Morris expects to receive approximately $1.7 billion in cash from the assumption of Miller Brewing Company's debt by SABMiller. This cash will be used to accelerate its share repurchase program. Additionally, the merger is projected to generate a one-time pre-tax gain of approximately $3 billion, which is anticipated to be recognized in the third quarter of 2002. The transaction is expected to be largely neutral to underlying diluted earnings per share in 2002 and 2003.

The transaction is expected to close in July 2002, subject to customary regulatory review and the approval of South African Breweries plc shareholders.