E-Malt.com News article: 1665

The Netherlands leading brewer, Heineken N.V., announced on October 10 that all necessary regulatory approvals for the acquisition of the Austrian-based brewery group BBAG have been granted unconditionally. As a result Heineken will complete the acquisition of 79.8% of Getranke-Beteiligungs-AG (GeBAG), the holding company controlling the BBAG Group, on 15 October 2003. Heineken and BBAG will ultimately combine all their operations in GeBAG, which will be renamed Brau Union AG. Brau Union AG will be responsible for all operations in thirteen Central European countries (Austria, Poland, Czech Republic, Romania, Hungary, Serbia-Montenegro, Slovakia, Bulgaria, Croatia, Bosnia-Herzegovina, Slovenia, Macedonia and Albania).

An immediate start will be made on integrating Heineken and BBAG operations in Central Europe, in order to realise the synergy gains which are expected to accrue from combining their businesses. The restructuring projects already initiated by BBAG in their markets will continue. In the coming months, Heineken will announce detailed integration plans for Poland and Hungary in particular.

The total transaction value based on 100% of BBAG's enterprise value - including the free-float minority shareholders in BBAG and its sub-holding Brau Union AG and the assumption of EUR 0.4 billion debt - is EUR 1.9 billion. The total cash outlay will amount to EUR 1.5 billion of which EUR 0.6 billion will be paid at completion. The remaining cash amount will be disbursed in the last quarter of 2003 and the first half year of 2004. Heineken will consolidate BBAG as of 1 October 2003.

Heineken will launch an offer for the publicly owned shares in BBAG and its sub-holding company Brau Union AG of EUR 124.00 per BBAG share and EUR 127.27 per Brau Union AG share. Based on the prices at which the shares traded on 30 April 2003, this represents a premium of 34% and 45%, respectively. These offers will be made in accordance with the Austrian Takeover Act. Further details of the offer will be published in due course.

After obtaining merger clearance in Hungary, Amstel Sorgyar Rt, a wholly owned Heineken subsidiary, agreed to acquire Brau Union AG's 85% shareholding in Brau Union Hungaria Rt. On 5 September 2003, in compliance with Hungarian law, Amstel Sorgyar submitted an offer for the publicly owned shares in Brau Union Hungaria for approval by the financial supervisory authority, PSZAF. The offer price is HUF 12,273 per ordinary share and HUF 12,806 per preference share, representing the average share prices over the 180 days preceding the offer date, as required by Hungarian law. This represents a premium of 129% on the Brau Union Hungaria stock market price on 30 April 2003, the last trading day before the announcement of the agreement between Heineken and the shareholders of GeBAG. The premium reaches a level of 188% compared with the performance of Brau Union Hungaria shares in 2002. The offer is still awaiting approval by the PSZAF.

The integration of Heineken and BBAG operations in Central and Eastern Europe will create an excellent platform for further growth. With a total volume of 26 million hectolitres, Heineken will be the regional market leader with a market share of 27%. Heineken, through the new Brau Union AG, will also be the market leader in most domestic Central European markets, creating opportunities for economies of scale and further profit growth. This move supports Heineken's strategy of seeking to achieve the highest-quality earnings of all international brewers.

Many of the countries in which the combined entity will operate are in the process of joining the European Union. This is expected to strengthen the economies of those countries, accelerate the increase in consumers' purchasing power, stimulate growth in beer consumption and favour development of the premium branded beer segment. Together, these factors are expected to generate excellent opportunities for growth in those markets.

Heineken expects to realise significant synergy gains in addition to the restructuring programme already initiated by BBAG. BBAG's strong market position in a number of countries in which Heineken does not have a significant presence will also support faster volume growth by the international Heineken premium brand.



10 October, 2003