InBev consolidates Chinese position

23/01/06 InBev has reached agreement with various parties to acquire, in a series of transactions, 100% of the equity interests in Fujian Sedrin Brewery Co. Ltd., the largest brewer in Fujian province, for a total cash consideration of RMB 5,886 million (equivalent to Euro 614 million*).

An initial equity stake of 39.48% will be acquired from Fujian Sedrin's State-owned shareholders immediately, following receipt of regulatory approval. The balance of 60.52% will be acquired from various other shareholders in one or more stages, before the end of 2007.Fujian Sedrin has a significant footprint in southeast China and is widely recognized for its outstanding management team and long-standing support from local government. It is headquartered in Putian, a city in Fujian Province with a population of approximately three million.

The company operates three breweries: in Putian and Sanming (both in Fujian Province) and Nanchang (Jiangxi Province). The total capacity of the three breweries is approximately nine million hectoliters. Fujian Sedrin is the leading brewer in Fujian Province with a market share of approximately 45% in 2004. It also had an approximately 18% market share in Jiangxi Province in 2004. Fujian Sedrin has an attractive brand portfolio with Sedrin Prime Beer, Sedrin Tiandi, Sedrin Pure Draft, and Sedrin Ice Beer in the local premium segment and core lagers such as Sedrin Jingpin and Sedrin Teshuang. Sedrin was recently honored with China's Famous Brand award by the authorities in recognition of its importance.

Fujian Province is situated on the eastern coast of China, has a population of approximately 35 million and is the fourth wealthiest province in China with GDP per capita of USD 2,082 in 2004. Jiangxi Province, adjoining Fujian to the west, has a population of approximately 43 million, with a GDP per capita of USD 986 in 2004.

The GDP growth rates of Fujian and Jiangxi were 12.1% and 13.2% respectively in 2004, higher than the nation's average growth of 9.5%.Upon completion of the transactions, InBev will further consolidate its stronghold in southeast China, a wealthy economic region, and become one of the largest brewers in China, with nearly 35 million hectoliters of sales and leading market shares in each of the provinces in which it competes, across 30 plants in 8 major provinces: Fujian, Guangdong, Hebei, Hubei, Hunan, Jiangsu, Jiangxi and Zhejiang.

"This transaction is a very significant step in our strategy and strongly reinforces both our leadership position and footprint in southeast China," said Carlos Brito, InBev CEO. "Fujian Sedrin is one of the most profitable Chinese brewers and in recent years has achieved an EBITDA margin in excess of 30%. The Sedrin brand will be one of InBev's top five selling brands globally by volume with significant potential for growth and expansion."This transaction represents an implied 2005 EV/EBITDA multiple of 13 times. InBev expects that the acquisition of Fujian Sedrin will be earnings accretive to operating results in year one, and Return On Invested Capital (ROIC)-Weighted Average Cost of Capital (WACC) will break-even in four years.