SAB chief tours Miller after deal is announced - South African Breweries's CEO Graham Mackay - Brief Article

Modern Brewery Age, June 10, 2002

A London-based company's purchase of Miller Brewing Co. likely will strengthen Wisconsin's beer making heritage, not dilute it, Miller's CEO said last week.

South African Breweries has announced it is buying Miller from Philip Morris Cos. for $3.6 billion in stock. Under the buyout, Miller would be renamed SABMiller and Miller CEO John Bowlin would be in charge of SABMiller U.S. and Central American operations.

"We are going to maintain our proud history and traditions," Bowlin said. "I think this is a win-win which the employees, the community, the state of Wisconsin will enjoy the benefits of in the future."

SAB's Chief Executive Graham Mackay toured Miller headquarters in Milwaukee and met with employees last week. Miller, the only major brewer still based in this one-time beer capital, will remain in Milwaukee.

"This is a perfect match between two great brewers," Mackay said.

Mackay said he met with Bowlin about 11/2 years ago and saw the potential then for combining the two companies.

SAB agreed to assume $2 billion in Miller debt. Philip Morris would receive a 36 percent stake in SABMiller, Philip Morris, which also produces Marlboro cigarettes and is parent company of Kraft foods, would get a 36 percent stake in SABMiller and intends to remain a long-term shareholder.

SAB expects to complete the acquisition in July, pending shareholder and regulatory approval.

The buyout would lift SAD, the world's fourth-largest brewer by volume, into second place, and make it a much tougher competitor for No. 1 Anheuser-Busch Cos.

Bowlin said the acquisition gives the combined companies "a legitimate opportunity to be the number one brewer in the world."

Steve Byers, who teaches a course in the history of beer and brewing at the University of Wisconsin-Milwaukee, agreed the sale will strengthen the state's beer heritage.

SABMiller likely will pump up Miller's marketing, giving more exposure to its regional brands such as Leinenkugel's, Dyers said.

Wisconsin has lost brewers Schlitz, Pabst and Blatz in the last 50 years as beer makers consolidate, Dyers said. Over the last decade, however, microbreweries, like New Glarus and Sprecher, and regional beer makers, such as Stevens Point and Joseph Huber, have had more room in the market to do business.

"History is repeating itself," Dyers said. "You're allowing smaller breweries to get a foothold and you're getting a stronger Miller. The company line is correct in this. This is very strong for the state."