SABMiller to Sell $750 Million in Equity to Black Investors

Participants will include SAB's employees; black-owned licensed liquor retailers and liquor licence applicants, as well as black-owned customers of ABI, the soft drinks division of SAB; and the broader South African community through an SAB foundation.

02/07/09 SABMiller has proposed to enter into a broad-based black economic empowerment transaction in South Africa, which will involve an equity issue of approximately 10% of its South African subsidiary, The South African Breweries Limited ("SAB"), to a broad base of black participants (the "Transaction"), reflecting the group's long-standing commitment to socio-economic progress in South African society. The Transaction will involve an equity interest of approximately 10% in SAB, valued at approximately US$750 million (R6 billion). Participants will include SAB's employees; black-owned licensed liquor retailers and liquor licence applicants, as well as black-owned customers of ABI, the soft drinks division of SAB; and the broader South African community through an SAB foundation.

The Transaction will not require any external bank funding, and will require only a small cash investment by licensed liquor retailers, liquor licence applicants and customers of ABI; meaningful cash dividends are expected to be paid to participants from the first year. At the end of the ten year transaction period, participants will exchange their shareholdings in SAB for shares in SABMiller. The economic cost of the Transaction to SABMiller, based on SABMiller's current assumptions and on market conditions as at Friday, 26 June 2009, is calculated at approximately US$220 million (R1.8 billion).

The Transaction will materially enhance SAB's compliance with the South African Government's Codes of Good Practice on Black Economic Empowerment and, in addition, seeks to support the normalisation of the South African liquor industry by supporting liquor licensing in South Africa. By seeking to promote sustainable economic growth and social development in South Africa, the Transaction will align the interests of the group's South African stakeholders with SABMiller's shareholders, and will maximise long term shareholder value.

Graham Mackay, Chief Executive of SABMiller plc, commented: "We have structured this transaction to maximise benefits for all our stakeholders and to deliver genuine broad-based black economic empowerment.

"There are three innovative and distinctive features of this transaction. Firstly, the transaction places no reliance on external bank funding, and requires only a relatively small and hence affordable cash investment from retail participants. Secondly, a meaningful dividend stream is expected to be paid to all participants for the whole of the ten-year transaction period, thereby delivering a significant economic benefit from the first year. Thirdly, the transaction aims to benefit the stakeholders who have made a real contribution to SAB's success as well as the broader South African community through the SAB Foundation."

Norman Adami, Managing Director of SAB, commented:  "We were determined to design a transaction that would deliver truly broad-based and tangible benefits, and we believe this transaction will do that from the beginning. This deal is good for South Africa and good for SAB."

SABMiller believes that broad-based black economic empowerment is a key requirement for the promotion of sustainable economic growth and social development in South Africa. Further, the South African government has promulgated the country's Codes of Good Practice on Black Economic Empowerment (the "Codes") as a means of reducing the effects of entrenched inequalities and improving the participation of previously disadvantaged people in effective economic activity.

In line with SAB's empowerment objectives, the Transaction is therefore designed to increase black participation in SAB by providing long term economic benefits to a broad range of black South Africans. The Transaction will result in the issue, in aggregate, of an estimated 10% equity shareholding in SAB, post issuance, to three groups, comprising employees ("Employees"); licensed liquor retailers, liquor licence applicants and customers of ABI, the soft drinks division of SAB ("Retailers"); and the broader South African community through the creation of an SAB foundation (the "SAB Foundation").

SABMiller believes that the Transaction, through the inclusion of these participant groups as shareholders, will facilitate the closer alignment of SAB's interests with its many stakeholders. Through the Transaction, SAB seeks to support the licensing process in South Africa and believes that there are considerable socio-economic benefits to be derived from a normalised and regulated industry in which liquor retailers, the vast majority of whom are currently unlicensed, are formally incorporated into the economy and liquor industry.

The Transaction will also make a material contribution towards achieving SAB's committed objective of attaining Level Four Contributor status on the basis of the scorecard contained in the Codes. Based on current assumptions, the Transaction will constitute an effective 16% broad-based black economic empowerment ownership transaction in terms of the Codes, after adjusting for mandated investments.

The ultimate size of the Transaction may change, depending on, amongst other things, financial and market conditions at the time of implementation, and the finalisation of beneficiary participation. The precise terms of the Transaction are expected to be finalised after the release, in November 2009, of SABMiller's interim results for the six months ending 30 September 2009 and, subject to SABMiller shareholder approval, the Transaction is expected to be implemented in the first half of 2010.