Philip Morris Sells Miller to South African Breweries

Philip Morris(MO Quote) said on Thursday that it was selling Miller Brewing to South African Breweries in a deal worth about $5.6 billion to form the world's second-largest brewer.

The sale will include $3.6 billion in stock and $2 billion in Miller debt, and upon completion, South African Breweries will change its name to SABMiller. The combined company, which will be headquartered in London, would have had 2002 pro forma EBITDA of $1.2 billion on beer sales volume of 102 million barrels.

Philip Morris will receive 430 million shares of SABMiller, giving it a 36% ownership stake in the combined company. Also, the assumption of Miller debt is expected to free up about $1.7 billion for Philip Morris to use in its share repurchase program. Philip Morris said that the combination of the transaction and the accelerated share repurchase program is expected to be neutral to 2002 and 2003 earnings, and the company reiterated its projection of 9% to 11% EPS growth in 2002. ...