AB InBev (BUD) Brazilian Subsidiary to Restructure

December 10, 2012 8:42 AM EST
Anheuser-Busch InBev (NYSE: BUD) shared that its majority-owned subsidiary Companhia de Bebidas das Américas—Ambev has announced its intention to propose to its shareholders for approval a corporate restructuring that would result in the transition of Ambev’s capital structure, currently a dual stock capital structure comprised of voting common shares and non-voting preferred shares, to a new single-stock capital structure comprised exclusively of voting common shares.
Pursuant to CVM Instruction No. 358/2002, Companhia de Bebidas das Américas – AmBev (the “Company” or “AmBev”) hereby announces that it intends to propose for deliberation by the Company’s shareholders, at an extraordinary general shareholders’ meeting of the Company to be convened in the first half of 2013 (the “EGM”), a corporate restructuring to transition the Company’s current dual stock capital structure comprised of voting common shares (“ON”) and non-voting preferred shares (“PN”) to a new, single-stock capital structure comprised exclusively of voting common shares.

The purpose of the proposed corporate restructuring is to simplify AmBev’s corporate structure and improve its corporate governance with a view to increasing liquidity to all shareholders, eliminating certain operating and administrative costs and providing more flexibility for management of the Company’s capital structure.

Steps for the Corporate Restructuring

If approved, the proposed restructuring will be implemented by means of a stock swap merger under the Brazilian Corporations Law (the “Stock Swap Merger”) according to which, as a result of an affirmative shareholder vote, all issued and outstanding shares of AmBev, including in the forms of American Depositary Receipts (“ADRs”) but excluding AmBev shares and ADRs held by InBev Participações S.A. (“InBev Part.”), a company controlled by Interbrew International B.V. (“IIBV”), which in turn is a subsidiary of Anheuser-Busch InBev S.A./N.V. (“ABI”), shall be exchanged for newly-issued common shares and ADRs of InBev Part. As a result of the Stock Swap Merger, all holders of AmBev’s preferred and common shares (including in the form of ADRs), other than InBev Part., will receive newly-issued common shares and, in some cases, ADRs of InBev Part. in exchange for their existing AmBev equity securities. For purposes of the Stock Swap Merger, equal value will be ascribed to each common and preferred share of AmBev.

The corporate restructuring described above will also include certain preliminary steps to the Stock Swap Merger, including the contribution to InBev Part. of all AmBev shares indirectly held by ABI through IIBV and AmBrew S.A. (“AmBrew”), which also is a subsidiary of ABI. Nonetheless, these preliminary steps will not affect the Stock Swap Merger’s exchange ratio to be proposed at the Stock Swap Merger EGM or dilute AmBev’s shareholders.

Procedures for Approval

Minority holders of both the common and preferred shares of AmBev will participate in the deliberation process that will evaluate the Stock Swap Merger. During the Stock Swap Merger EGM, the minority holders of AmBev preferred shares will have the opportunity to separately express their opinion on the transaction.

ABI and Fundação Antonio e Helena Zerrener Instituição Nacional de Beneficência (“FAHZ”) have already informed the Company’s management that they will defer to the opinion on the Stock Swap Merger that the Company’s other common and preferred shareholders shall separately express at the Stock Swap Merger EGM.

To this end, ABI and FAHZ will either abstain from voting or will vote their common shares in a manner to ensure that the implementation of the Stock Swap Merger shall be a result of the favorable opinion of minority holders of both the common and preferred shares of AmBev.

Governance After the Restructuring

The common shares of InBev Part. will confer to its holders the same rights and privileges currently conferred by the common shares of AmBev. The bylaws of InBev Part. (which will have its corporate name changed to AmBev S.A. if the Stock Swap Merger is approved) will be substantially identical to the Company’s current bylaws, except that: (i) the minimum mandatory dividend will be increased from 35% to 40% of adjusted net income for the year and (ii) the board of directors will include two independent members.

The terms of the Company’s current shareholders’ agreement to which AmBrew, IIBV and FAHZ are parties (the “Shareholders’ Agreement”) will remain unchanged when they become applicable to InBev Part., which at that point will have been renamed AmBev S.A. In addition, the referred parties have already initiated discussions to renegotiate new terms for the Shareholders’ Agreement to become effective on July 1, 2019. These new terms will be disclosed in due course once negotiations are finalized.

Additional Information

Prior to the Stock Swap Merger EGM, InBev Part. intends to submit to the Brazilian Securities Commission (“CVM”) and the U.S. Securities and Exchange Commission (“SEC”) all applicable registration applications that may be required in connection with the transaction in order to permit that, as soon as reasonably possible, the shares of InBev Part. to be received by AmBev’s shareholders as a result of the Stock Swap Merger be tradeable on the São Paulo Securities, Commodities and Futures Exchange (“BM&FBOVESPA”) and, in the form of ADRs, on the New York Stock Exchange.

Following the conclusion of all proceedings for the transfer of the Company’s operations to InBev Part., it is intended that AmBev, which at that point will have become a wholly-owned subsidiary of InBev Part., shall be merged with and into InBev Part. together with other subsidiaries of the Company with a view to further simplifying the group’s corporate structure, reducing operating costs and capturing approximately R$105 million in goodwill currently existing at the InBev Part. level, thereby sharing this benefit with all of AmBev’s shareholders.

Pursuant to Section 137 of the Brazilian Corporations Law, those common shareholders of the Company who do not vote in favor of the Stock Swap Merger will be entitled to withdraw from the Company by exercising appraisal rights. To be eligible to exercise appraisal rights, holders of AmBev common shares must continuously hold their shares as from the close of trading on December 7, 2012 until their exercise of those rights.

The implementation of the Stock Swap Merger is subject to the approval by the Company’s EGM that will deliberate on the matter, the execution of a stock swap merger agreement under Brazilian Corporations Law (protocolo de incorporação) and obtaining the required registrations from the competent authorities.

Additional information on the proposed transaction, including those required by CVM Instruction No. 319/1999, such as the fair value appraisal report that will back-up AmBev’s capital increase resulting from the Stock Swap Merger, will be disclosed in due course when available.

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