Proposal by Anheuser-Busch InBev SA/NV - 7 October

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN, INTO, OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF THAT JURISDICTION

THIS IS AN ANNOUNCEMENT FALLING UNDER RULE 2.4 OF THE CITY CODE ON TAKEOVERS AND MERGERS (THE "CODE") AND DOES NOT CONSTITUTE AN ANNOUNCEMENT OF A FIRM INTENTION TO MAKE AN OFFER UNDER RULE 2.7 OF THE CODE. THERE CAN BE NO CERTAINTY THAT ANY FIRM OFFER WILL BE MADE OR AS TO THE TERMS ON WHICH ANY FIRM OFFER MIGHT BE MADE

7 October 2015

SABMiller plc ("SABMiller", the "Company")

Proposals from Anheuser-Busch InBev SA/NV ("AB InBev")

SABMiller notes the announcement made by AB InBev.

Rejection of prior AB InBev proposals

On 22 September 2015, AB InBev made a highly conditional proposal to acquire the entire issued share capital of SABMiller for GBP 62 billion (the "GBP 40 Proposal"), comprising an all-cash offer of GBP 40 per SABMiller share and a partial unlisted share and cash alternative ("PUSCA") of GBP 35.59 per SABMiller share.

On 24 September 2015, the full Board of SABMiller subsequently reviewed the GBP 40 Proposal made by AB InBev and unanimously concluded that it very substantially undervalues SABMiller, its unique and unmatched footprint, and its standalone prospects. The full Board therefore unanimously rejected the GBP 40 Proposal.

The next contact from AB InBev was a meeting on 5 October 2015 at which AB InBev tabled the same GBP 40 Proposal again. During the meeting, its CEO also indicated the possibility, subject to recommendation by the SABMiller Board and approval by the AB InBev Board, of increasing its offer for the entire issued share capital of SABMiller to GBP 65 billion, including an all-cash offer of GBP 42 per SABMiller share alongside a PUSCA (the "GBP 42 Proposal").

The full Board of SABMiller met on 5 October 2015 and unanimously reconfirmed its rejection of the GBP 40 Proposal. The Board, excluding the directors nominated by Altria Group Inc., also concluded that, even if AB InBev formalised the GBP 42 Proposal, it would reject such a proposal as it still very substantially undervalues SABMiller.

The new proposal

It should be noted that the all-cash offer within the new proposal announced today (the "GBP 42.15 Proposal") is only GBP 0.15 higher than the GBP 42 Proposal considered and rejected on 5 October 2015. The Board will, of course, meet formally to consider the GBP 42.15 Proposal as soon as practicable and a further announcement will be made thereafter.

Jan du Plessis, Chairman of SABMiller, said: "SABMiller is the crown jewel of the global brewing industry, uniquely positioned to continue to generate decades of standalone future volume and value growth for all SABMiller shareholders from highly attractive markets. AB InBev needs SABMiller but has made opportunistic and highly conditional proposals, elements of which have been deliberately designed to be unattractive to many of our shareholders. AB InBev is very substantially undervaluing SABMiller."

Details of the GBP 42.15 Proposal

The GBP 42.15 Proposal comprises a cash offer of GBP 42.15 per SABMiller share together with a PUSCA in respect of up to approximately 42% of the entire issued share capital of SABMiller.

The PUSCA comprises a stock element of up to 326 million shares in AB InBev and an aggregate of up to approximately GBP 1.6 billion in cash which equates to 0.483969 shares in AB InBev and GBP 2.37 in cash per SABMiller share. The PUSCA values each SABMiller share at approximately GBP 37.49 based on the closing price of AB InBev ordinary shares and exchange rates on 6 October 2015.

The stock element of the PUSCA, as communicated to the Board of SABMiller, would take the form of a separate class of shares in AB InBev which would be:

· unlisted;

· subject to a 5-year lock-up;

· convertible into ordinary AB InBev shares at the end of that 5-year lock-up period;

· ranking pro rata for dividends and voting rights with ordinary AB InBev shares; and

· entitled to unspecified director nomination rights to the Board of the combined company.

The cash offer of GBP 42.15 per SABMiller share is equivalent to a 12% premium to the value of the PUSCA of GBP 37.49 on 6 October 2015.

Assuming a pro rata election for the PUSCA, the GBP 42.15 Proposal values each SABMiller share at GBP 40.21.

The GBP 42.15 Proposal is, inter alia, conditional upon both SABMiller's two largest shareholders, Altria Group Inc. and BevCo Ltd., who together hold approximately 40% of the entire issued share capital of SABMiller, executing irrevocable undertakings to vote in favour of the transaction and to elect for the PUSCA in respect of their entire holdings in SABMiller. If there are elections for the PUSCA by other SABMiller shareholders for more than the number of shares available under the PUSCA, then the allocations to Altria Group Inc. and BevCo Ltd. (and any other SABMiller shareholders who elected for more than their pro rata elections) would be scaled back accordingly.

AB InBev has indicated that, with effect from completion of a transaction, it would list the ordinary shares of the combined company (but not the stock element of the PUSCA) on the Johannesburg Stock Exchange by way of a secondary listing.

Reasons for the rejection of the GBP 40 Proposal and the GBP 42 Proposal

In rejecting these proposals, the Board of SABMiller has taken into account the following:

· the proposals very substantially undervalue SABMiller and its standalone prospects and growth potential;

· the approach has been timed opportunistically to take advantage of SABMiller's recently depressed share price;

· the structure of the proposals, which the Board believes discriminates against the substantial proportion of SABMiller shareholders who may not be able to hold unlisted shares; and

· the highly conditional nature of the proposals, including significant regulatory hurdles in the U.S. and in China, on which AB InBev has not yet provided comfort to SABMiller.

The Board was also concerned that the value of the PUSCA would fluctuate with movements in AB InBev's share price during a lengthy period to completion. Consequently, there is no certainty that the cash offer would remain at a premium to the PUSCA.

In addition, AB InBev has indicated that it would not be prepared to list the stock element of the PUSCA. This has been taken into account by the Board of SABMiller in its consideration of the proposals.

In determining that the GBP 42 Proposal very substantially undervalues the Company, the Board of SABMiller took into account that:

· assuming that Altria Group Inc. and BevCo Ltd. elect for the PUSCA in respect of their entire holdings and no other shareholders elect for the PUSCA, the GBP 42 Proposal represented a multiple of only 14.7x Group EBITDA in the fiscal year ended 31 March 2015, a significant discount compared to the multiples for comparable transactions;

· assuming a pro rata election for the PUSCA, the GBP 42 Proposal represented a premium per share of just 24% to SABMiller's 3 month volume weighted average share price prior to 15 September 2015 (the latest date prior to the announcement of AB InBev's approach) and of 33% to SABMiller's share price on 15 September 2015;

· the cash offer represented a premium of just 30% to SABMiller's 3 month volume weighted average share price prior to 15 September 2015 (the latest date prior to the announcement of AB InBev's approach) and of 39% to SABMiller's share price on 15 September 2015; and

· the PUSCA represented a premium of just 16% to SABMiller's 3 month volume weighted average share price prior to 15 September 2015 (the latest date prior to the announcement of AB InBev's approach) and of 24% to SABMiller's share price on 15 September 2015.

The Board is confident that SABMiller's management team will create sustainable shareholder value through its strong differentiated standalone strategy, underpinned by:

· an unmatched footprint in fast growing developing markets, in which SABMiller has invested heavily to capture decades of future growth, particularly in Africa and Latin America;

· a distinctive, highly capable culture with a management track record of successfully navigating challenges in developing markets to build strong growth businesses;

· a portfolio of iconic national and global brands with leading positions in attractive markets;

· exposure to further attractive, developing markets and beverage categories through joint ventures and strategic alliances in China, Africa and Asia;

· strong cash generation from developed markets, especially in the U.S. and Australia;

· a vision to build, broaden and premiumise the beer category - expanding beer's appeal to more consumers on more occasions with a range of new beer styles and flavours; and

· continuing global integration to optimise resources, win in markets and reduce costs.

There can be no certainty that an offer will be made or as to the terms on which any offer might be made.

This statement is being made by SABMiller without the prior agreement or approval of AB InBev.

Enquiries

SABMiller plc +44 (0) 20 7659 0100

Christina Mills, Director, Group Communications +44 (0) 20 7659 0105

+44 (0) 7825 275605

Gary Leibowitz, Director, Investor Relations +44 (0) 7717 428540

Richard Farnsworth, Group Media Relations +44 (0) 7734 776317

Robey Warshaw +44 (0) 20 7317 3900

Simon Robey

Simon Warshaw

J.P. Morgan Cazenove +44 (0) 20 7777 2000

John Muncey

Dwayne Lysaght

Morgan Stanley +44 (0) 20 7425 8000

Henry Stewart

Paul Baker

Goldman Sachs +44 (0) 20 7774 1000

Gilberto Pozzi

Mark Sorrell

Finsbury +44 (0) 20 7251 3801

Faeth Birch

James Murgatroyd

Linklaters LLP and Hogan Lovells International LLP are providing legal advice to SABMiller.

Important notices relating to financial advisers

Robey Warshaw LLP ("Robey Warshaw"), which is authorised and regulated by the Financial Conduct Authority, is acting as joint financial adviser to SABMiller and no one else in connection with the contents of this announcement and will not be responsible to anyone other than SABMiller for providing the protections afforded to its clients or for providing advice in connection with the contents of this announcement or any matter referred to in this announcement.

J.P. Morgan Limited, which conducts its UK investment banking businesses as J.P. Morgan Cazenove ("J.P. Morgan Cazenove"), is authorised and regulated in the United Kingdom by the Financial Conduct Authority. J.P. Morgan Cazenove is acting as joint financial adviser exclusively for SABMiller and no one else in connection with the matters set out in this announcement and will not regard any other person as its client in relation to the matters in this announcement and will not be responsible to anyone other than SABMiller for providing the protections afforded to clients of J.P. Morgan Cazenove, or for providing advice in relation to any matter referred to herein.

Morgan Stanley & Co. International plc ("Morgan Stanley") which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority in the UK is acting as joint financial adviser to SABMiller and no one else in connection with the matters set out in this announcement. In connection with such matters, Morgan Stanley, its affiliates and their respective directors, officers, employees and agents will not regard any other person as their client, nor will they be responsible to any other person for providing the protections afforded to their clients or for providing advice in relation to the contents of this announcement or any other matter referred to herein.

Goldman Sachs International ("Goldman Sachs"), which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority in the United Kingdom, is acting exclusively for SABMiller and no one else in connection with the matters referred to in this announcement and will not be responsible to anyone other than SABMiller for providing the protections afforded to clients of Goldman Sachs, or for providing advice in connection with the contents of this announcement or any other matter referred to herein.

Disclosure requirements of the Takeover Code (the "Code")

Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any securities exchange offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm (London time) on the 10th business day following the announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1% or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror, save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4). 

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at http://www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. If you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure, you should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129.

Publication on Website

A copy of this announcement will be made available on www.sabmiller.com by no later than 12 noon (London time) on 8 October 2015.

You may request a hard copy of this announcement by contacting SABMiller's company secretary on +44 (0) 1483 264000. You may also request that all future documents, announcements and information to be sent to you in relation to the offer should be in hard copy form.

Bases of calculation

GBP 40 Proposal

The value of the PUSCA equivalent to GBP 35.59 per SABMiller share has been calculated by reference to:

· the exchange ratio of 0.483969 shares in AB InBev for every SABMiller share as per the GBP 40 Proposal;

· AB InBev's closing share price of EUR 98.06 on 6 October 2015;

· the GBP/ EUR exchange rate of 0.7399 on 6 October 2015; and

· the cash element of GBP 0.48 per SABMiller share.

The value of the cash element within the PUSCA equivalent to GBP 0.48 per SABMiller share has been calculated by reference to:

· the cash offer valued at GBP 40 per SABMiller share; multiplied by

· a factor of 0.88 as per the GBP 40 Proposal; less

· the value of the stock element within the PUSCA, fixed at GBP 34.7212 per SABMiller share for the purpose of this calculation as per the GBP 40 Proposal.

The value of the entire issued share capital of SABMiller equivalent to approximately GBP 62 billion implied by the GBP 40 Proposal and assuming that Altria Group Inc. and BevCo Ltd. elect for the PUSCA in respect of their entire holdings and no other shareholders elect for the PUSCA has been calculated by reference to:

· the cash offer valued at GBP 40 per SABMiller share for approximately 60% of the entire issued share capital of SABMiller;

· the PUSCA valued at GBP 35.59 per SABMiller share for approximately 40% of the entire issued share capital of SABMiller; and

· 1,619 million ordinary shares outstanding as disclosed in SABMiller's Rule 2.10 statement on 5 October 2015.

GBP 42 Proposal

The value of the PUSCA equivalent to GBP 37.35 per SABMiller share has been calculated by reference to:

· the exchange ratio of 0.483969 shares in AB InBev for every SABMiller share as per the GBP 42 Proposal;

· AB InBev's closing share price of EUR 98.06 on 6 October 2015;

· the GBP/ EUR exchange rate of 0.7399 on 6 October 2015; and

· the cash element of GBP 2.24 per SABMiller share.

The value of the cash element within the PUSCA equivalent to GBP 2.24 per SABMiller share has been calculated by reference to:

· the cash offer valued at GBP 42 per SABMiller share; multiplied by

· a factor of 0.88 as per the GBP 42 Proposal; less

· the value of the stock element within the PUSCA, fixed at GBP 34.7212 per SABMiller share for the purpose of this calculation as per the GBP 42 Proposal.

The value of the entire issued share capital of SABMiller equivalent to approximately GBP 65 billion implied by the GBP 42 Proposal and assuming that Altria Group Inc. and BevCo Ltd. elect for the PUSCA in respect of their entire holdings and no other shareholders elect for the PUSCA has been calculated by reference to:

· the cash offer valued at GBP 42 per SABMiller share for approximately 60% of the entire issued share capital of SABMiller;

· the PUSCA valued at GBP 37.35 per SABMiller share for approximately 40% of the entire issued share capital of SABMiller; and

· 1,619 million ordinary shares outstanding as disclosed in SABMiller's Rule 2.10 statement on 5 October 2015.

The value of the entire issued share capital of SABMiller equivalent to approximately GBP 65 billion implied by the GBP 42 Proposal and assuming the PUSCA is taken up in full has been calculated by reference to:

· the cash offer valued at GBP 42 per SABMiller share for approximately 58% of the entire issued share capital of SABMiller;

· the PUSCA valued at GBP 37.35 per SABMiller share for approximately 42% of the entire issued share capital of SABMiller; and

· 1,619 million ordinary shares outstanding as disclosed in SABMiller's Rule 2.10 statement on 5 October 2015.

The per share value of the GBP 42 Proposal equivalent to GBP 40.07 assuming a pro rata election for the PUSCA has been calculated by reference to:

· the value of the entire issued share capital of SABMiller equivalent to approximately GBP 65 billion implied by the GBP 42 Proposal and assuming the PUSCA is taken up in full; and

· 1,619 million ordinary SABMiller shares outstanding.

The multiple of 14.7x Group EBITDA in the fiscal year ended 31 March 2015 has been calculated by reference to:

· the value of the entire issued share capital of SABMiller implied by the GBP 42 Proposal and assuming that Altria Group Inc. and BevCo Ltd. elect for the PUSCA in respect of their entire holdings and no other shareholders elect for the PUSCA;

· the USD / GBP exchange rate of 1.5212 on 6 October 2015;

· net debt of USD 10,465 million and provisions for defined benefit plans of USD 205 million as disclosed in SABMiller's Annual Accounts for the fiscal year ended 31 March 2015;

· non-controlling interests valued at USD 4,996 million based on SABMiller's trading P/E of 19.4x as at 15 September 2015 (based on U.S. cents 239.1 adjusted basic earnings per share in fiscal year ended 31 March 2015 and the USD / GBP exchange rate of 1.5359 on 15 September 2015) applied to USD 258 million of profit attributable to non-controlling interests in the fiscal year ended 31 March 2015 as disclosed in SABMiller's Annual Accounts; and

· Group EBITDA of USD 7,762 million in the fiscal year ended 31 March 2015 as disclosed in SABMiller's Annual Accounts.

The premia over the SABMiller share price have been calculated by reference to:

· SABMiller's closing share price of GBP 30.15 on 15 September 2015; and

· SABMiller's 3 month weighted average share price prior to 15 September 2015 of GBP 32.21.

GBP 42.15 Proposal

The value of the PUSCA equivalent to GBP 37.49 per SABMiller share has been calculated by reference to:

· the exchange ratio of 0.483969 shares in AB InBev for every SABMiller share as per the GBP 42.15 Proposal;

· AB InBev's closing share price of EUR 98.06 on 6 October 2015;

· the GBP/ EUR exchange rate of 0.7399 on 6 October 2015; and

· the cash element of GBP 2.37 per SABMiller share.

The value of the cash element within the PUSCA equivalent to GBP 2.37 per SABMiller share has been calculated by reference to:

· the cash offer valued at GBP 42.15 per SABMiller share; multiplied by

· a factor of 0.88 as per the GBP 42.15 Proposal; less

· the value of the stock element within the PUSCA, fixed at GBP 34.7212 per SABMiller share for the purpose of this calculation as per the GBP 42.15 Proposal.

The aggregate value of the cash element within the PUSCA equivalent to approximately GBP 1.6 billion has been calculated by reference to:

· the value of the cash element within the PUSCA equivalent to GBP 2.37 per SABMiller share;

· 326 million shares in AB InBev available under the PUSCA; and

· the exchange ratio of 0.483969 shares in AB InBev for every SABMiller share as per the Proposal.

The value of the entire issued share capital of SABMiller equivalent to approximately GBP 65 billion implied by the GBP 42.15 Proposal and assuming that Altria Group Inc. and BevCo Ltd. elect for the PUSCA in respect of their entire holdings and no other shareholders elect for the PUSCA has been calculated by reference to:

· the cash offer valued at GBP 42.15 per SABMiller share for approximately 60% of the entire issued share capital of SABMiller;

· the PUSCA valued at GBP 37.49 per SABMiller share for approximately 40% of the entire issued share capital of SABMiller; and

· 1,619 million ordinary shares outstanding as disclosed in SABMiller's Rule 2.10 statement on 5 October 2015.

The value of the entire issued share capital of SABMiller equivalent to approximately GBP 65 billion implied by the GBP 42.15 Proposal and assuming the PUSCA is taken up in full has been calculated by reference to:

· the cash offer valued at GBP 42.15 per SABMiller share for approximately 58% of the entire issued share capital of SABMiller;

· the PUSCA valued at GBP 37.49 per SABMiller share for approximately 42% of the entire issued share capital of SABMiller; and

· 1,619 million ordinary shares outstanding as disclosed in SABMiller's Rule 2.10 statement on 5 October 2015.

The per share value of the GBP 42.15 Proposal equivalent to GBP 40.21 assuming a pro rata election for the PUSCA has been calculated by reference to:

· the value of the entire issued share capital of SABMiller equivalent to approximately GBP 65 billion implied by the GBP 42.15 Proposal and assuming the PUSCA is taken up in full; and

· 1,619 million ordinary SABMiller shares outstanding.