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    South African Breweries Purchases Miller Brewing

    LONDON/JOHANNESBURG - South African Breweries Plc (SAB) today agreed to buy U.S. beer giant Miller Brewing for $5.6 billion. The move makes SAB the number two brewer in the world behind Anheuser-Busch.

    LONDON/JOHANNESBURG - South African Breweries Plc (SAB) today agreed to buy U.S. beer giant Miller Brewing for $5.6 billion. The move makes SAB the number two brewer in the world behind Anheuser-Busch.

    London-based SAB is paying $3.6 billion in shares to Miller's owner, Philip Morris, and taking on Miller debt of $2 billion. The deal will give Philip Morris a 36 percent economic interest in the enlarged brewer, to be called SABMiller Plc, Reuters reports.

    "This is a transforming deal for us, for Miller and for the global scene. It works in its own right and will lead to more industry consolidation," said SAB Chief Executive Graham Mackay.

    Mackay is seeking shareholder approval for a possible equity issue of 170 million shares or 14 percent of the enlarged capital, in which Philip Morris will not participate, according to Reuters.

    SAB is the world's number four brewer with the Castle and Czech Pilsner Urquell brands, and is a major player in Africa, China and Eastern Europe. Number six Miller has a fifth of the U.S. beer market, making it number two in the world's largest beer market after Anheuser-Busch.

    Philip Morris will receive 430 million shares in the merged brewing company and has agreed not to sell any shares in the merged firm until June 2005.

    The equity-debt split is likely being structured due to SAB's inability to put up more cash, and partly so that Philip Morris can limit its tax liability on the deal, analysts note.

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