AUSTRIA: Heineken close to closing BBAG deal

Dutch brewer Heineken NV said today it was close to completing the acquisition of 79.8% of Getranke-Beteiligungs-AG (GeBAG), the holding company controlling the BBAG Group.

Having received all the necessary regulatory approvals for the acquisition, it said it expected to complete on 15th October.

Heineken and BBAG will ultimately combine all their operations in GeBAG, which will be renamed Brau Union AG. The new company will be responsible for all operations in thirteen Central European countries (Austria, Poland, Czech Republic, Romania, Hungary, Serbia-Montenegro, Slovakia, Bulgaria, Croatia, Bosnia-Herzegovina, Slovenia, Macedonia and Albania).

"An immediate start will be made on integrating Heineken and BBAG operations in Central Europe, in order to realise the synergy gains which are expected to accrue from combining their businesses. The restructuring projects already initiated by BBAG in their markets will continue. In the coming months, Heineken will announce detailed integration plans for Poland and Hungary in particular," Heineken said in a statement.

The total transaction value based on 100% of BBAG's enterprise value is €1.9 billion. The total cash outlay will amount to €1.5 billion of which €0.6 billion will be paid at completion. The remaining cash amount will be disbursed in the last quarter of 2003 and the first half year of 2004. Heineken will consolidate BBAG as of 1 October 2003.

Heineken will launch an offer for the publicly owned shares in BBAG and its sub-holding company Brau Union AG of €124.00 per BBAG share and €127.27 per Brau Union AG share.

In a statement Heineken said: "The integration of Heineken and BBAG operations in Central and Eastern Europe will create an excellent platform for further growth. With a total volume of 26 million hectolitres, Heineken will be the regional market leader with a market share of 27%. Heineken, through the new Brau Union AG, will also be the market leader in most domestic Central European markets, creating opportunities for economies of scale and further profit growth. This move supports Heineken's strategy of seeking to achieve the highest-quality earnings of all international brewers."

It continued: "Many of the countries in which the combined entity will operate are in the process of joining the European Union. This is expected to strengthen the economies of those countries, accelerate the increase in consumers' purchasing power, stimulate growth in beer consumption and favour development of the premium branded beer segment. Together, these factors are expected to generate excellent opportunities for growth in those markets."