The Cult Of Propaganda

Some of the definitions of a cult, as defined by, include 1) “an instance of great veneration of a person, ideal, or thing,” 2) “a group or sect bound together by veneration of the same thing, person, ideal, etc.,” 3) “a religion or sect considered to be false, unorthodox, or extremist, with members often living outside of conventional society under the direction of a charismatic leader,” and 4) “any system for treating human sickness that originated by a person usually claiming to have sole insight into the nature of disease, and that employs methods regarded as unorthodox or unscientific.” That sure sounds like Alcohol Justice, and many other prohibitionist groups, to me. They hold up the ideal that alcohol is bad, and anyone making it, selling it or saying anything good about it is not only wrong, but evil. They use extremist rhetoric and tactics to advance their agenda and they’re certainly “outside of conventional society” since the majority of people enjoy alcohol from time to time, and without question they use “methods regarded as unorthodox or unscientific,” especially the unscientific variety masquerading as science. I don’t know if I’d call Bruce Lee Livingston “a charismatic leader;” he seems like more of an opportunist than an evangelist, but he’s also a “dancer” and a “tennis player,” so who knows? But as far as I can see, they pass the test for being a cult.

So it’s slightly amusing to see that the cult of propaganda, a.k.a. Alcohol Justice, has placed Anheuser-Busch InBev in the AJ Doghouse for the sin of making something that’s “flavored” and “glow-in-the-dark,” which of course means that it must be “youth-attractive,” whatever that means. And if that wasn’t vague enough for you, they helpfully include a link in their tweet to their doghouse explanation entitled “Flavored? Glow-in-the-dark? A-B InBev.” Which by itself seems fairly silly. I’m pretty sure almost everything, with the possible exception of neutral spirits, has a flavor of some kind. Frankly, even the neutral ones taste of something, I mean nobody confuses them with water. But why is glow-in-the-dark such a danger? Lots of things light up at night. What is Sheriff AJ so worried about this time?

In a desperate attempt to gain back young drinkers with tricks children enjoy, A-B InBev is going to dangerous lengths. A-B InBev hopes that its release of Oculto, a new tequila-infused citrus-flavored beer, will lure Millennials back to the A-B InBev stable and brands such as Bud Light.

I’m not sure what led them to declare it was “desperation” that led ABI to make Oculto, but the link tells you everything you need to know. It’s a Fast Company article from March of this year, meaning it took AJ nine months to sound the alarm. In its title, they ask Can AB InBev Seduce Millennials with a New Tequila-Infused Beer?, in which “Vice President of U.S. Marketing Jorn Socquet outlines the strategy behind the brewer’s new brand Oculto, which includes masks and secret messages.”

So who are these Millennials of which they speak? I’m never quite sure where one named generation starts, and another ends, so I took to that series of tubes known as the interwebs. When you Google the term, the immediate answer is “a person reaching young adulthood around the year 2000; a Generation Yer.” So that would mean ABI is targeting drinkers who reached adulthood at least 15 years ago. Oh, the horror. But other sources do claim Millennials include people who were born as late as 2000. But regardless to insist that ABI is targeting people below 21, who are legally unable to buy what they’re selling is, as usual, an absurdity. I’m not a fan of Oculto as a type of drink, alcopops, or even many of ABI’s products more generally, but they have enough legal customers not to risk doing something illegal or trying to court underage customers. That AJ continues to insist that they’re doing exactly that strains credulity and exposes them as charlatans who would say or do anything to advance their agenda, whether it make sense or not. But AJ goes on in their delusional way.

With a campaign based on elaborate masks, whispered secrets, and mysterious club parties where new drinkers are indoctrinated into the brand, more brand ambassadors join the Oculto fold. Yes, it does sound like a dangerous cult or hazing ritual.

No, it sounds like a bad idea to pander to young adults’ love of Halloween by co-opting imagery from Mexico’s — and all of South America’s — Day of the Dead celebrations. But if you’re worried about a dangerous cult, you need look no further than a mirror. When you start manufacturing controversy, you’re engaging in your own cult-like behavior. Don’t look behind the curtain, reality is what we say it is.

Like other alcohol brands hoping to appeal to youth and attract those who would otherwise reject beer, A-B InBev is focusing the majority of its Oculto marketing strategy on social media, e.g. Instagram. The label includes a glow-in-the-dark, Day-of-the-Dead-inspired skull that looks and acts like a children’s decoration. While A-B InBev attempts to illuminate the Oculto brand label, the risk of harm to young people inside the bottle glows brightly.

You keep using that word “youth.” I do not think it means what you think it means. AJ acknowledges that it was inspired by the Day of the Dead, but mis-characterizes it as “a children’s decoration.” Have they seen a Day of the Dead celebration? Apparently not, or they’d know better than to accuse a glow-in-the-dark skull as being exclusive;y for children. What is it about something that glows in the dark that makes it “youth-attractive” anyway? That similarly makes absolutely no earthly sense. I love phosphorus gadgets, and our house and outside of it, is filled with them. I’m about as far away from youth as one can get, and I love things that glow in the dark.

Also, the idea that the target for Oculto is to “get” people “who would otherwise reject beer” is ridiculous, and completely misleading and false. Did AJ even read the article they’re using to put ABI in the doghouse? The people who are rejecting beer are drinking “hard booze,” drinks like “whiskey and tequila.” So this is really AJ specifically targeting beer — sigh, again — and not alcohol in general. If they were really worried about kids, or people’s health, they’d be applauding this effort to get young adults to drink something far less potent than hard liquor. Oculto, even at 6% ABV, is still no where near as strong as the weakest tequilas or whiskies. Tequila is usually 80 proof, or 40% ABV, while whiskey is around 40-46% ABV. But ABI’s in the doghouse for trying to get people to drink their weaker offering. How does that make any kind of sense?

Their laughable insistence that anything kids, or even young adults perhaps not quite 21, might find appealing is, by definition, “youth-attractive,” is a canard, and a dangerous one that they use time and time again. There is no division between “youth-attractive” and “adult-attractive.” Such delineations do not exist in the real world. Many things adults like, kids like, too. And many things kids love, adults continue to enjoy, as well. The only people who “put away childish things” as so-called grown-ups are, in my opinion, idiots with a stick up their ass who forgot how to enjoy their one and only life. But they’re just the sort of person who might join a cult, even one trying to rid the world of beer.


Pretty Beer To Stop Brewing

Sad news. Dann and Martha Paquette, co-owners of the Pretty Things Beer and Ale Project posted on their website today their decision to cease the operations of their company. Explaining their decision in For a Beginning, there must be an End, here’s what’s up:

Seven years ago we sold our first glass of beer at The Publick House in Brookline. We didn’t foresee then that our strange project would become such a part of our lives.

It has been a crazy fun time. We’ve dressed up in more costumes than a Bob Hope special. Amazing employees and friends have conspired with us along the way. Bocky, Anya, and John Funke have channeled our project almost better than we have done ourselves. And we found a rag tag group of like-minded creative brewers out there in the world as well.

Brewing our beers has been a great labor and a great joy. But best of all we shared it with so many great beer drinkers. It really feels like we met you all. We’ve stood in shops, bars, restaurants, on stages, in VFW halls. Sometimes you were already fans. Sometimes you spat out our beer. Sometimes you just fancied a chat. We always felt happy to meet you by the end. It was always fun, or funny, or we sold a beer, or learned something. Many of you became friends. We’ve loved drinking beers with you.

We hope our beers brought you joy and brought you closer together. There’s no greater goal for a batch of beer or a project like ours.

After seven years it’s time to draw the curtains and head off to a new adventure. A poorly drawn grain of barley called Jack D’Or made this whole thing possible. He’ll be coming with us.

Besides making great beer, Dann’s thoughtful approach to everything they do has been great to watch, if only from afar. The few times we’ve spent any time together I’ve loved talking philosophically with him and certainly hope his voice won’t be lost as he transitions to whatever adventure awaits him in the next chapter of his journey. And I wish Dann and Martha the best of best wishes going forward.

Pretty Things beer will be available until it runs out, probably sometime in January of next year. If I were you, I’d stock up while you can.

Their parting shot.

Why The Big Beer Companies Will Fail To Court Women

Earlier this week, I read in AdAge that Budweiser Pulls Puppies From Super Bowl Ad Plans for the very sensible reason that they weren’t terribly effective. As AdAge notes, “as cute as they are, the puppies apparently don’t sell beer.”

I also read in Bloomberg that ABI was going to shift their advertising focus away from the male-dominated imagery that they’ve employed for decades, objectifying and alienating one-half of the world’s consumers, in an effort to win over female beer drinkers. “‘Objectification of women is going away,’ said Jorn Socquet, AB InBev’s vice president of marketing for the U.S.” in the Bloomberg article, What ‘Gender Friendly’ Ads Look Like to Big Beer.


That strategy has created a demographic where only about one-quarter of women drink their beer, yet when they were riding high they didn’t seem to care at all how they treated the mothers, aunts, sisters, wives and girlfriends of the people who bought their beer. Despite loud and vocal criticism of those practices for years and years, only now that their sales are slipping have they seemed to have noticed and decided they should “win back women.” To do this, they’re going to air an ad during the Super Bowl “built around the idea that coming together over a frosty Bud Light can help solve the world’s problems, including unequal pay.”

But can one ad, or even a series of ads, undo decades of tone deaf ads that were, and continue to be, downright awful to women? And it’s not like things have gotten much better in the more enlightened 21st century. If anything, attacks on women have increased in politics, business and in the media.


As The Atlantic wonders, Are TV Ads Getting More Sexist? and Business Insider notes that These Modern Ads Are Even More Sexist Than Their ‘Mad Men’ Era Counterparts. And more specific to beer, Vinepair makes a compelling case that 13 Sexist Beer Ads Show How Little Has Changed Since the 1950s. There’s an entire Tumblr devoted to Bad Beer Ads for Women. There’s no shortage of material to show that it’s not really gotten any better in my lifetime.


But if corporations are people, they are people with convenient Alzheimer’s Disease. They’ll undoubtedly try to convince women that they’ve had this change of heart because it’s right thing to do (and even though it might be) but the truth is that it only has to do with profit. They’ll hope that no one will remember how bad, and how consistently sexist, their ads have been for decades upon decades, right up to the present day.

Fortune magazine weighed in with their take on the new plan, with how Beer Companies Are Courting Women, and here’s how you know that they don’t really get it and it will fail.

In order to win over women, the beer companies are designing more colorful packaging and creating sweeter drinks, like the Bud Lite Lime-A-Rita. But taste isn’t necessarily the problem — MillerCoors and AB InBev are focusing on the social aspect of beer, too.

I love how the big brewers always think that changing up the packaging is the way to woo customers. The idea that women will only respond to “more colorful packaging” and only want “sweeter drinks” is laughably naive and almost criminally insulting. And this is, remember, them trying to “court women,” a similarly insulting turn of phrase. How many times have we seen beer companies try fruitier, sweeter beers and pink packaging to entice women? How often has it worked? The now defunct Beer West magazine had a good overview of such failed attempts in Have You Really Come A Long Way, Baby? How beer is(n’t) marketed to women.


To illustrate that it’s not just Anheuser-Busch InBev wearing blinders, MillerCoors’ senior marketing insights director Britt Dougherty opined that they’re “going through a feminization of culture” as a way of saying the days of “airing ads that objectify women” are over. I’ll believe it when I see it. I suspect that as soon as this doesn’t prove as successful as they want, they’ll return to the tried and true male-oriented advertising that’s been their bread and butter my entire lifetime.


Sexism, perhaps more than any of the destructive -isms, makes no sense to me. I’m male, and it makes no sense. Why do so many men feel they have to keep down women? Every one of us has a female mother. Most of us have sisters, aunts, and daughters. Why would we ever want to keep them from succeeding? I know there’s at least some religious reasons for it, but even that can’t account for all of it. Why would you voluntarily keep you mother, wife or daughter from being able to climb as high as they want to in life? Why would you harass, objectify or otherwise insult every other female, just because they’re female? I honestly don’t understand it. How can you hate your mother? How can you hate your wife? How can you hate your daughters? Because hatred toward some women, by using sexism, objectification and other insults, is hatred toward all women, your own family included.


And yet it seems to be rampant, and growing, in our society. It should be a thing of the past, a relic, but as Gamergate makes abundantly clear, there are males in our society who hate women to the point that they want to do them actual physical harm for saying things they don’t like, disagree with or just having an opinion. That seems nuts, but perhaps more confusing is that we don’t do more to put a stop to it as a society. Can there really be enough men who are deaf and blind to what’s happening, or do they secretly agree with them or just not give a shit so long as they’re on top of the perceived hierarchy? I have a daughter who I want to grow up in a world where she can do whatever she wants, follow every opportunity available to her and live her life to the fullest, exactly the same as her brother, my son, is able to do. And as it stands now, that seems like it’s too much for society to bear, that true gender equality remains as elusive as the end of racism. Why the fuck should that be the case? If we can’t even erase it from the beer industry, which ought to know better, what chance have we for the wider world? So while I think this is the right step for the big beer companies, they haven’t shown themselves to take any action except ones that help their bottom line. And while that is to be expected (being a problem with the institution of corporations) you’d like to think that even male executives have women in their lives that would make such decisions increasingly difficult, yet so far that remarkably hasn’t been the case.

Maybe if we celebrated our similarities — like enjoying beer — instead of pandering to our differences, that would be a good start. So yeah, let’s keep sexism out of beer advertising, out of beer culture and out of the breweries themselves. We’re all just people, beer-loving people.


Craft Beer Product Segmentation 2015: A Tale Of Two Charts

It was the best of charts, it was the worst of charts. So begins every great story. This made me laugh like the Dickens this morning, as fellow beer writer Bryan Roth tweeted a chart showing “Craft Production in the U.S.” apparently as of August 2015.


The data comes from IBISWorld, a company that identifies themselves as “one of the world’s leading publishers of business intelligence, specializing in Industry research and Procurement research.” Their website shows that they have offices in Los Angeles, New York, Melbourne, London and Beijing, although the chart claims they’re “Chicago-based.” The report is entitled “Craft Beer Production in the US: Market Research Report,” and was published in August of this year. If you want to buy yourself a copy, it costs between $925 and $1,595, depending on which purchase option you choose.

Hopefully, the chart was not created by IBISWorld, because besides mis-identifying where the company is located, as Roth points out, “the graphic designer who created alternating sized circles not dependent on their % share is bad at their job.” It’s a terrible chart, on so many levels. First, why use “stencil” as the font for the title in the red center circle? Why are the outer circles different shades of blue, for no apparent rhyme or reason. There’s no discernible pattern to that decision. Bock is the lightest color, at 3.9%, followed by Amber Ale at 10.9%, so you might be tempted to think the color is dependent on market share, lighter for lower and darker for higher percentages. But no, fruit beer is the lowest, at 3.5%, and is medium blue, while Lager, at only 8.6%, is the darkest blue on the chart.

Why are the black lines not emanating from the center of the middle? Instead, it looks like one of the webs from the 1980s video game “Tempest.” They all meet in an outer ring, too, except for Bock and Wheat Beer, which are curiously left hanging. But most egregious, the size of the circles are not even close to being proportional to the percentages expressed in them. The sizes appear to be nothing more than random, just like the color choices. So at first glance, it makes no sense and is, at best, confusing. At worst, it looks like it was designed by a five-year old, and frankly that may be overly insulting to toddlers.

Carla Jean Lauter, better known by her nom nom de plume, The Beer Babe, was similarly bothered by the chart, but decided to do something about it. She “fixed” it, making the bubbles proportional to their market share so the chart is easier to read and better represents the reality it’s trying to convey. She also chose the colors of the bubbles to be representative of the beer color of each style, even choosing pumpkin color for seasonal. As Lauter tweeted when she posted her version of the chart, “I feel better now.” Weirdly, so do I. It’s so much better.


The Big Brewers: Global Spread

Looking for something else this morning, I found this map created by Reuters from 2013, showing the dominant beer company for each country, effectively showing “the global reach” of each of the four biggest companies at that time. This was created the last time rumors were circulating about an ABI takeover of SABMiller, in October of 2013.


So I took the map and quickly replaced the teal of SABMiller with ABI blue to show what the global reach might look like post-buyout.


And here’s a side-by-side comparison. There will be a lot more blue.


SABInBev Will Control 6 Of 10 Best-Selling U.S. Beers

According to a new report in Business Insider, the new entity combining Anheuser-Busch InBev and SABMiller will control six out of the ten best-selling beers in America, and it would have been eight, except the deal currently stipulates that “Molson Coors will take Miller off of SABMiller’s hands.” But I especially like the handy flowchart they created to show the evolution of the various companies that will come together to become SABInBev, or whatever they end up calling the new beer behemoth. Sadly, it looks like SABMiller, or what’s left of it, will simply be absorbed into ABI.


Constellation Brands Buys Ballast Point

ballast-point constellation
Constellation Brands announced this morning that they will acquire Ballast Point Brewing & Spirits Company for roughly $1 billion. If you’re not familiar with Constellation, they’re “the number three beer company in the U.S. with high-end, iconic imported brands including Corona Extra, Corona Light, Modelo Especial, Negra Modelo and Pacifico. Constellation is also the world’s leader in premium wine, selling great brands that people love including Robert Mondavi, Clos du Bois, Kim Crawford, Rex Goliath, Mark West, Franciscan Estate, Ruffino and Jackson-Triggs. The company’s premium spirits brands include SVEDKA Vodka and Black Velvet Canadian Whisky.”

So far, almost all of the news about the deal is from the press release:

Constellation Brands (NYSE: STZ and STZ.B), a leading beverage alcohol company, today announced an agreement to acquire San Diego-based Ballast Point Brewing & Spirits. Ballast Point is one of the fastest growing craft beer companies in the U.S. with a beer portfolio that includes more than 40 different styles of beer, led by its popular Sculpin IPA and Grapefruit Sculpin IPA. The partnership with Ballast Point provides a high-growth premium platform that will enable Constellation to compete in the fast-growing craft beer segment, further strengthening its position in the highest end of the U.S. beer market.

Ballast Point started in 1996 as a small group of home brewers and remains dedicated to the art of making better quality craft beer. Ballast Point will continue to operate as a stand-alone company with its existing management team and employees running the day-to-day operations. The company is one of the most successful and respected craft beer companies in the country, with an expertise in brewing the most premium, highest quality award winning products, and a grassroots approach to innovation that engages beer lovers and home brewers in the process. The Ballast Point team will continue to build on its successful expansion across the U.S., and will now have access to Constellation’s strong financial position and willingness to invest in growth.

“We started this business nearly 20 years ago with a vision to produce great beer that consumers love and to do it the right way,” said Jack White, founder of Ballast Point Brewing & Spirits. “To achieve that vision, we needed to find the right partner. The team at Constellation shares our values, entrepreneurial spirit and passion for beer, and has a proven track record of helping successful premium brands reach the next level of growth and scale.”

“We believe in the vision that Jack and his team have created and we’re excited to welcome Ballast Point, one of the most respected craft brewers in the country, to the Constellation Brands family,” said Rob Sands, chief executive officer, Constellation Brands. “Along with imports, craft beer is a key driver of growth and premiumization within the beer industry, with craft doubling its share of the U.S. beer market in the last five years. Ballast Point has certainly been a key driver of that growth. Their business philosophy and entrepreneurial spirit perfectly align with our culture and we look forward to strengthening our position in the high-end beer segment with what is arguably the most premium major brand in the entire craft beer business.”

Ballast Point is on pace to sell nearly 4 million cases in calendar 2015, which would represent growth of more than 100 percent versus calendar 2014. Net sales for calendar 2015 are expected to approximate $115 million. Volume and net sales growth from calendar 2012 to calendar 2014 averaged over 80 percent. Ballast Point employs more than 500 employees, produces beer in four facilities in the San Diego, CA area, and sells its beer in over 30 states.

Constellation Brands plans to purchase Ballast Point Brewing & Spirits for approximately $1 billion. The purchase price values the acquisition multiple of the projected calendar 2016 Ballast Point EBITDA in the mid-to-high teens range. Constellation estimates that on a comparable basis (1), the acquisition is expected to be neutral to diluted earnings per share for fiscal 2016 and $0.05 to $0.06 accretive for fiscal 2017. The transaction will be financed with cash and debt, and is expected to close by the end of calendar year 2015, subject to customary closing conditions.


SABInMillerBev, or “A Brief History Of Big Beer”

Niall, at the Missing Drink, has an interesting post about the possible buyout of SABMiller by Anheuser-Busch InBev. Entitled A Brief History of Big Beer, he provides some analysis of the deal, but I especially like his helpful chart of the M&A of all the major players, which is below. It’s great to see them laid out to encapsulate the history of those big deals, especially in recent decades.

Click here to see the chart full size.

Here’s his clever take on what the newly minted entity might be called, and what a new alphabet soup logo might look like. It was genius taking the “AB” from ABI and putting it with the “S” from SAB. It certainly will be interesting to see what new name (and logo) does emerge if the deal ultimately goes through.


SABMiller and Anheuser-Busch InBev Reach “Agreement In Principle”

abib sabmiller
While most of us were sleeping, it appears SABMiller and Anheuser-Busch InBev were quite busy, and announced this morning SABMiller and Anheuser-Busch InBev [Reach] Agreement in principle and extension of PUSU. The New York Times has an analysis of the deal, or you can read the entire Press Release from SABMiller:


LONDON–The Boards of AB InBev (Euronext: ABI) (NYSE: BUD) and SABMiller (LSE: SAB) (JSE: SAB) announce that they have reached agreement in principle on the key terms of a possible recommended offer to be made by AB InBev for the entire issued and to be issued share capital of SABMiller (the “Possible Offer”).

Terms of Possible Offer

Under the terms of the Possible Offer, SABMiller shareholders would be entitled to receive GBP 44.00 per share in cash, with a partial share alternative (“PSA”) available for approximately 41% of the SABMiller shares.

The all-cash offer represents a premium of approximately 50% to SABMiller’s closing share price of GBP 29.34 on 14 September 2015 (being the last business day prior to renewed speculation of an approach from AB InBev).

The PSA consists of 0.483969 unlisted shares and GBP 3.7788 in cash for each SABMiller share, equivalent to a value of GBP 39.03 per SABMiller share on 12 October 2015, representing a premium of approximately 33% to the closing SABMiller share price of GBP 29.34 as of 14 September 2015. Further details of the PSA are set out below.

In addition, under the Possible Offer, SABMiller shareholders would be entitled to any dividends declared or paid by SABMiller in the ordinary course in respect of any completed six-month period ended 30 September or 31 March prior to completion of the possible transaction, which shall not exceed USD 0.2825 per share for the period ended 30 September 2015 and a further USD 0.9375 per share for the period ended 31 March 2016 (totalling USD 1.22 per share) and shall not exceed an amount to be agreed between AB InBev and SABMiller in respect of periods thereafter (which shall be disclosed in any announcement of a firm intention to make an offer).

The Board of SABMiller has indicated to AB InBev that it would be prepared unanimously to recommend the all-cash offer of GBP 44.00 per SABMiller share to SABMiller shareholders, subject to their fiduciary duties and satisfactory resolution of the other terms and conditions of the Possible Offer.

Antitrust and reverse break fee

In connection with the Possible Offer, AB InBev would agree to a “best efforts” commitment to obtain any regulatory clearances required to proceed to closing of the transaction. In addition, AB InBev would agree to a reverse break fee of USD 3 billion payable to SABMiller in the event that the transaction fails to close as a result of the failure to obtain regulatory clearances or the approval of AB InBev shareholders.


The announcement of a formal transaction would be subject to the following matters:

  1. a) unanimous recommendation by the Board of SABMiller in respect of the all-cash offer, and the execution of irrevocable undertakings to vote in favour of the transaction from members of the SABMiller Board, in a form acceptable to AB InBev;
  2. b) the execution of irrevocable undertakings to vote in favour of the transaction and to elect for the PSA from SABMiller’s two major shareholders, Altria Group, Inc. and BevCo Ltd., in each case in respect of all of their shareholding and in a form acceptable to AB InBev and SABMiller;
  3. c) the execution of irrevocable undertakings to vote in favour of the transaction from AB InBev’s largest shareholders, the Stichting Anheuser-Busch InBev, EPS Participations SaRL and BRC SaRL in a form acceptable to AB InBev and SABMiller;
  4. d) satisfactory completion of customary due diligence; and
  5. e) final approval by the Board of AB InBev.

The Board of AB InBev fully supports the terms of this Possible Offer and expects (subject to the matters above) to give its formal approval immediately prior to announcement.

AB InBev reserves the right to waive in whole or in part any of the pre-conditions to making an offer set out in this announcement, other than c) above which will not be waived.

The conditions of the transaction will be customary for a combination of this nature, and will include approval by both companies’ shareholders and receipt of antitrust and regulatory approvals.

In view of the timetable for obtaining some of these approvals, AB InBev envisages proceeding by way of a pre-conditional scheme of arrangement in accordance with the Code.

The cash consideration under the transaction would be financed through a combination of AB InBev’s internal financial resources and new third party debt.

Further details of the PSA

The PSA comprises up to 326 million shares, which will be available for approximately 41% of the SABMiller shares. These shares would take the form of a separate class of AB InBev shares (the “Restricted Shares”)[1], with the following characteristics:

  • Unlisted and not admitted to trading on any stock exchange;
  • Subject to a five-year lock-up from closing;
  • Convertible into AB InBev ordinary shares on a one for one basis after the end of that five year period;
  • Ranking equally with AB InBev ordinary shares with regards to dividends and voting rights; and
  • Director nomination rights.

SABMiller shareholders who elect for the partial share alternative will receive 0.483969 Restricted Shares[2] and GBP 3.7788 in cash for each SABMiller share.

Extension of the PUSU deadline

In accordance with Rule 2.6(a) of the Code, AB InBev was required, by not later than 5.00 pm on 14 October 2015, to either announce a firm intention to make an offer for SABMiller in accordance with Rule 2.7 of the Code or announce that it does not intend to make an offer for SABMiller, in which case the announcement will be treated as a statement to which Rule 2.8 of the Code applies.

In accordance with Rule 2.6(c) of the Code, the Board of SABMiller has requested that the Panel on Takeovers and Mergers (the “Panel”) extends the relevant deadline, as referred to above, to enable the parties to continue their talks regarding the Possible Offer. In the light of this request, an extension has been granted by the Panel and AB InBev must, by not later than 5.00 pm on 28 October 2015, either announce a firm intention to make an offer for SABMiller in accordance with Rule 2.7 of the Code or announce that it does not intend to make an offer for SABMiller, in which case the announcement will be treated as a statement to which Rule 2.8 of the Code applies. This deadline will only be extended with the consent of the Panel in accordance with Rule 2.6(c) of the Code.

AB InBev reserves the following rights:

  1. a) to introduce other forms of consideration and/or to vary the composition of consideration;
  2. b) to implement the transaction through or together with a subsidiary of AB InBev or NewCo or a company which will become a subsidiary of AB InBev or NewCo;
  3. c) to make an offer (including the all-cash offer and PSA) for SABMiller at any time on less favourable terms:

(i) with the agreement or recommendation of the Board of SABMiller;
(ii) if a third party announces a firm intention to make an offer for SABMiller on less favourable terms; or
(iii) following the announcement by SABMiller of a whitewash transaction pursuant to the Code; and

  1. d) to reduce its offer (including the all-cash offer and PSA) by the amount of any dividend that is announced, declared, made or paid by SABMiller prior to completion, save for ordinary course dividends declared or paid prior to completion, which shall not exceed USD 0.2825 per share for the period ended 30 September 2015 and a further USD 0.9375 per share for the period ended 31 March 2016 (totalling USD 1.22 per share) and shall not exceed an amount to be agreed between AB InBev and SABMiller in respect of periods thereafter (which shall be disclosed in any announcement of a firm intention to make an offer).

The announcement does not constitute an offer or impose any obligation on AB InBev to make an offer, nor does it evidence a firm intention to make an offer within the meaning of the Code. There can be no certainty that a formal offer will be made.

A further announcement will be made when appropriate.