The world''''s third largest brewer, UK-based, SABMiller is buying Dutch beer maker Royal Grolsch for €48.25 per share, representing an 84 per cent premium over Grolsch''''s average closing share price during the past month. The offer values Grolsch''''s entire issued and outstanding shares at approximately €816 million ($1.2 billion).

The British brewer has secured the backing of the Dutch brewer''''s board.
In a joint communiqué, the two companies today said that they had reached conditional agreement regarding the making, by SABMiller, of fully financed, public cash offer to acquire all the outstanding shares of Grolsch.

"Grolsch will provide SABMiller with a powerful addition to its international brand portfolio," Graham Mackay, chief executive of SABMiller, said. "Within the SABMiller family Grolsch will continue to build on almost 400 years of brewing heritage, and together we will establish new positions in the most important emerging beer markets around the world. Both companies share a passion for the brewing tradition, and we are delighted to be part of this new chapter in Grolsch''''s development."

Grolsch is an iconic Dutch beer brand with almost 400 years of brewing heritage and a strong position in the Netherlands. It is positioned as a true Dutch beer brewed to an original recipe, which the company says, "is now complemented by 21st century production processes and innovative packaging. In addition to Grolsch Premium Pilsner, which accounts for over 90 per cent of its portfolio, Grolsch also has a number of attractive brand variants including Grolsch Premium Weizen, Spring Bock and Autumn Bock as well as the Amsterdam brand.

SABMiller said, "Grolsch''''s provenance, taste profile and existing premium positioning will play a highly complementary role in SABMiller''''s international brand portfolio and better position SABMiller to expand its market share in the fastest growing segment of the global beer market."

Ab Pasman, chief executive of Grolsch, said, "In addition to financial considerations it was important for us to give a lot of attention to the interests of our employees, customers and our home region. We were doing a good job executing our independent strategy.

"When we were asked to consider SABMiller''''s proposal the key question was if greater value could be achieved than through our own existing strategy. Since this appeared to be the case we entered into discussions and we believe that SABMiller''''s intended offer delivers benefits to all of our stakeholders. We look forward to continuing to build our position as a premium brand within the new family."

SABMiller''''s global footprint provides opportunities to take the Grolsch brand into new geographies, particularly in developing markets where, historically, quality Northern European brands have often established the premium segment. SABMiller sees significant potential across Africa and Latin America, where the premium segment is still in its infancy, and in the more developed markets of Central and Eastern Europe.

South Africa represents a key opportunity and with the addition of Grolsch, SABMiller will have a particularly strong portfolio of highly differentiated premium brands in that market. No change to the existing distribution agreements for the brand in the US, UK, Canada, Australia and certain smaller markets is anticipated at this time.

In 2004 Grolsch completed the construction of a state of the art c. 3.8 million hectolitre brewery, which SABMiller can use to drive global growth of the Grolsch brand while also providing an opportunity for SABMiller to brew its own international brands for sale in the Netherlands and for export to key markets.

The supervisory board and management board of Grolsch is said to have unanimously supported the SABMiller''''s intended offer and will recommend it to its shareholders.

The "committed shareholders" have signed an irrevocable undertaking to tender their shares to SABMiller if the intended offer is made. The irrevocable contains certain customary undertakings and conditions including that the committed shareholders will only tender their shares to a third party offeror at a price of at least 7.5 per cent above the offer price. SABMiller will have the right to match any bona fide competing offer.

SABMiller and Grolsch expect to reach full agreement regarding the final ofering memorandum. When made, the offer will be subject to customary conditions, including an acceptance threshold of at least 75 per cent per cent of the outstanding shares of Grolsch.

SABMiller will require the permission of the management and supervisory boards of Grolsch in order to declare the public offer unconditional in the situation that less than 66.7 per cent of the outstanding shares have been tendered, committed and acquired. In the event that the offer is declared unconditional and less than 95 per cent of the total share capital is acquired, SABMiller intends to use available legal measures (for example a legal merger and squeeze out) in order to increase its ownership to 100 per cent of the total share capital. The offer will not be subject to regulatory clearances.

Advisers
ABN AMRO Bank is acting as financial adviser to SABMiller and Fortis is acting as financial adviser to Grolsch.