8-KOther Events

ALTRIA GROUP, INC. 8-K Report (Jun 11, 2002)

Filed June 11, 2002For Securities:MO

Summary

Philip Morris Companies Inc., now known as Altria Group, Inc. (MO), filed an 8-K on June 10, 2002, to report a significant strategic transaction. On May 30, 2002, the company announced an agreement to merge its wholly-owned subsidiary, Miller Brewing Company, with South African Breweries plc (SAB). This merger will create a new entity, SABMiller, where Philip Morris will hold a substantial economic interest of approximately 36% and a 24.99% voting interest. The transaction is structured as a merger of Miller into a subsidiary of SAB, with Philip Morris receiving shares in the newly formed SABMiller in exchange for its stake in Miller, which will also transfer approximately $2 billion in net debt. The filing details the extensive terms and conditions for this transaction, including various agreements such as the Transaction Agreement, an Inducement Fee Letter, a Relationship Agreement, a Transitional Services Agreement, and a Tax Matters Agreement. Key conditions for completion involve shareholder approvals from SAB, regulatory clearances, and no material adverse changes. The transaction is expected to close by January 31, 2003, and outlines provisions for employee benefits, ongoing services from Philip Morris to the new entity, and tax implications. This move signifies a major shift in Philip Morris's (Altria's) portfolio, divesting its brewing operations to focus on its core tobacco businesses.

Key Highlights

  • 1Philip Morris Companies Inc. (now Altria Group, Inc.) is merging its Miller Brewing Company subsidiary with South African Breweries plc (SAB).
  • 2The combined entity will be named SABMiller.
  • 3Philip Morris will receive approximately 430 million shares in SABMiller, representing roughly a 36% economic interest (pre-equity placing) and a 24.99% voting interest.
  • 4Miller Brewing Company will transfer to SAB with approximately $2 billion in net debt.
  • 5Completion of the transaction is subject to various conditions, including SAB shareholder approval and regulatory clearances, with an expected closing by January 31, 2003.
  • 6A Relationship Agreement will govern the ongoing relationship between Philip Morris and SABMiller, including board representation and shareholding restrictions for Philip Morris.
  • 7A Transitional Services Agreement will ensure Philip Morris continues to provide certain services to Miller for up to 30 months post-completion.

Frequently Asked Questions

This 8-K filing announces and details a significant merger agreement between Philip Morris Companies Inc. (now Altria Group, Inc.) and South African Breweries plc (SAB). The core of the announcement is the merger of Philip Morris's Miller Brewing Company subsidiary with SAB to form a new company, SABMiller.

Upon completion of the transaction, Philip Morris will receive 430 million shares in SABMiller, representing an economic interest of approximately 36% (before an intended equity placing by SABMiller) and a voting interest capped at 24.99%. Miller Brewing Company will be merged into SAB, and will carry approximately $2 billion in net debt.

The transaction is contingent upon several factors, including the approval of SAB's shareholders, obtaining necessary clearances from competition authorities, the listing of new SAB ordinary shares on the London Stock Exchange, and the absence of any material adverse changes for either SAB or Miller. The deal is expected to close by January 31, 2003.

A 'Relationship Agreement' will define the ongoing relationship. Philip Morris will have rights to nominate a limited number of non-executive directors to the SABMiller board based on its shareholding percentage. There are also restrictions on Philip Morris's ability to acquire more shares (limited voting to 24.99%) and on its ability to dispose of shares until after a specified period, subject to certain conditions. Philip Morris will also provide transitional services to Miller for up to 30 months post-merger.