UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
13E-3
Rule
13e-3
Transaction Statement
under
Section 13(e) of the Securities Exchange Act of 1934
QUILMES
INDUSTRIAL (QUINSA) SOCIÉTÉ ANONYME
(Name
of
Subject Company (issuer))
QUILMES
INDUSTRIAL S.A.
(Translation
of Issuer’s Name into English)
QUILMES
INDUSTRIAL (QUINSA) SOCIÉTÉ ANONYME
(Name
of
Filings Persons (identifying status as offeror, issuer or other
person))
Registered
Office: 84, Grand Rue L-1660 Luxembourg
Registered
Number: RCS Luxembourg B 32501
Class
B
Common Shares, without par value
American
Depositary Shares, each of which represents two (2) Class B Shares, without
par
value, evidenced by American Depositary Receipts
(Title
of
Class of Securities)
74838Y20
(CUSIP
Number)
Miguel
Gomez Eiriz
Chief
Financial Officer
84,
Grand Rue L-1660 Luxembourg,
Grand-Duchy
of Luxembourg.
(352) 47
38 85
(Name,
Address and Telephone Number of Person
Authorized
to Receive Notices and Communications)
________________
WITH
COPIES TO:
Diane
G. Kerr
Davis
Polk & Wardwell
450
Lexington Avenue
New
York, New York 10023
(212) 450
4000
(Name,
address and telephone number of person authorized to receive notices and
communications on behalf of the bidder)
This
statement is filed in connection with (check the appropriate box):
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a)
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[
] The filing of solicitation materials or an information
statement subject to Regulation 14A, Regulation 14C or Rule 13e-3(c)
under
the Securities Exchange Act of
1934.
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b)
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[
] The filing of a registration statement under the Securities Act
of
1933.
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Check
the
following box if the solicitation materials or information statement referred
to
in checking box (a) are preliminary
copies: [ ]
Check
the
following box if the filing fee is a final amendment reporting the results
of
the transaction: [ ]
Calculation
of Filing Fee
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Transaction
Value
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Amount
of Filing Fee
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$385,596,349.00
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n/a
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*
Set
forth the amount on which the filing fee is calculated and state how it was
determined.
[
ü
]Check
the box if any
part of the fee is offset as provided by the Exchange Act Rule 0-11(a)(2) and
identify the filing with which the offsetting fee was previously
paid. Identify the previous filing by registration statement number,
of the Form or Schedule and the date of its filing.
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Amount
Previously Paid:
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$11,837.81
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Form
or Registration Number:
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Schedule
TO-T
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Filing
Party:
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Companhia
de Bebidas das Américas - AmBev
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Date
Filed:
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12-28-07
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This
Rule 13E-3 Transaction
Statement (this “Transaction Statement”) is filed by Quilmes Industrial
(Quinsa), Société Anonyme (“Quinsa” or the “Company”). This Transaction
Statement relates to the offer by Companhia de Bebidas das Américas – AmBev
(“AmBev” or the “Offeror”) to purchase any and all outstanding Class A Shares
and Class B Shares (including Class B Shares held as American Depositary
Shares
(“ADSs”)) of the Company that are not owned by AmBev or its affiliates upon the
terms and subject to the conditions set forth in the Offer to Purchase,
including all schedules thereto, and in the related Letters of Transmittal
filed
by the Offeror on December 28, 2007 (which, as amended or supplemented from
time
to time, together constitute the “Offer to Purchase”). The
information set forth in the Offer to Purchase and in the Schedule TO-C filed
by
the Offeror on December 26, 2007, is, where specified herein, expressly
incorporated by reference in response to items of this Transaction Statement,
and is supplemented by the information specifically provided
herein. Capitalized terms defined in the Offer to Purchase and used
herein without definition shall have the meanings specified in the Offer
to
Purchase.
FORWARD-LOOKING
STATEMENTS
This
Transaction Statement , the
documents incorporated by reference and the documents to which Quinsa refers
contain statements that are or may constitute forward-looking statements.
These
statements appear throughout this Transaction Statement and include statements
regarding our intent, belief or current expectations, including but not limited
to any statements concerning:
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our
corporate
strategy;
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our
expectations regarding our
future performance, revenues, income, earnings per share, capital
expenditures, dividends, liquidity and capital
structure;
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our
development of new
products;
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the
demand for beer, soft drinks
and water;
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the
supply and availability of
barley and malt;
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trends
affecting our financial
condition or results of operations;
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our
future
performance;
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our
dividend
policy;
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possible
future repurchases of our
stock;
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the
future impact of competition
and regulation;
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political
and economic conditions
in the countries in which we or our affiliates operate or may operate
in
the future;
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any
statements preceded by,
followed by or that include the words “believes”, “expects”, “predicts”,
“anticipates”, “intends”, “estimates”, “should”, “may” or similar
expressions; and
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other
statements contained or
incorporated by reference in this
Transaction
Statement
regarding matters
that are not
historical facts.
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Because
such statements are subject to
risks and uncertainties, actual results may differ materially from those
expressed or implied by such forward-looking statements. Factors that could
cause actual results to differ materially include, but are not limited
to:
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uncertainties
relating to
political and economic conditions in
Argentina
and the other countries of
Latin
America
where we
conduct our business;
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the
rate of inflation and exchange
rate risks, particularly, increases in the exchange rate of the Argentine
peso or of the local currencies of other countries in which we operate,
against the U.S. dollar;
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restrictions
on the ability to
exchange local currencies in the markets where we do business into
hard
currencies;
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the
adoption of a restrictive
currency transfer policy in the countries where we conduct our
business;
and
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the
nature and extent of future
competiti
on in our
principal markets.
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Due
to extensive and rapid changes in
laws as well as economic and business conditions in most of the countries
where
Quinsa owns assets, it is difficult to predict the impact of such changes
on
Quinsa’s financial condition. You should not place undue reliance on such
statements, which speak only as of the date that they were made. Quinsa’s
independent public accountants have not examined or compiled the forward-looking
statements and, accordingly, do not provide any assurance with respect to
such
statements. These cautionary statements should be considered together with
any
written or oral forward-looking statements that Quinsa may issue in the future.
Quinsa does not undertake any obligation to release publicly any revisions
to
forward-looking statements contained in this Transaction Statement to reflect
later events or circumstances or to reflect the occurrence of unanticipated
events.
For
all these forward-looking
statements, Quinsa claims the protection of the safe harbor for forward-looking
statements contained in the Private Securities Litigation Reform Act of
1995.
ITEM
1. SUMMARY TERM SHEET.
The
terms of the Offer are described by
the Offeror and set forth under “Summary Term Sheet” in the Offer to Purchase,
which, except for the paragraph following the question “What does the Company’s
Board of Directors Recommend Regarding the Offer?”, is incorporated herein by
reference.
The
information incorporated by
reference is supplemented as follows:
WILL
QUINSA DELIST ITS STOCK IF THE AMBEV OFFER IS SUCCESSFUL?
AmBev
has
indicated that it plans for Quinsa to apply to delist the remaining non-tendered
ADSs from the NYSE and the remaining non-tendered Class A shares and Class
B
shares from the LSE, and to terminate the ADS facility and, as and when
permitted by applicable law and regulation, the registration of the Class B
shares under the Exchange Act. While these actions require the
approval of Quinsa’s Board of Directors, shareholders should be aware that AmBev
controls all appointments to Quinsa’s board.
WHAT
DOES
THE COMPANY’S BOARD RECOMMEND WITH RESPECT TO THE OFFER?
The
Company’s Board has determined unanimously that the Offer is fair to the
Company’s shareholders other than AmBev and its affiliates and recommends that
these shareholders tender all of their shares in the Offer. See “Item
7. Purposes, Alternatives, Reasons and Effects” and “Item 8. Fairness of the
Transaction”.
ITEM
2. SUBJECT COMPANY INFORMATION.
(a)
The name of the subject company is Quilmes Industrial (Quinsa), Société
Anonyme. The address of Quinsa’s registered and principal executive
offices is 84, Grand Rue L-1660 Luxembourg, Grand-Duchy of Luxembourg. Quinsa’s
telephone number is (352) 47 38 85. Quinsa’s authorized
representative in the United States is Puglisi & Associates, 850 Library
Avenue, Suite 204, P.O. Box 885, Newark, Delaware 19715. The
information set forth in the Offer to Purchase in Section 8 (“The Offer -
Certain Information Concerning the Company and the Offeror”) is incorporated
herein by reference.
(b)
As of
January 11, 2008, the Company had issued and
outstanding
609,923,950 Class A Shares and 47,188,974
Class B Shares (including Class B Shares held as ADSs) net of shares held by
the
Company in treasury and unissued shares.
(c)
The information set forth in the Offer to Purchase in Section 6 (“The Offer -
Price Range of Shares and ADSs; Dividends”) is incorporated herein by
reference.
The
following information relating to the trading prices of the Company’s Class A
Shares, Class B Shares and ADSs supplements the information provided in Section
6 (“The Offer- Price Range of Shares and ADSs; Dividends) of the Offer to
Purchase.
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Price
per Class A share
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Price
per Class B share
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Price
per ADS
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High
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Low
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High
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Low
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High
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Low
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November
2007
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$2.78
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$2.76
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$28.60
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$27.50
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$68.00
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$64.00
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$3.35
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$2.85
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$33.53
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$28.50
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$68.05
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$66.59
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As
of the
close of trading on January 11, 2008, the trading price on the LSE of Class
A
Shares and Class B Shares was $4.04 per Class A share and $38.80 per Class
B
share and the trading price on the NYSE of the ADSs was $81.90 per
ADS.
(d) The information set forth in Section 6 (“The Offer - Price Range of
Shares and ADSs; Dividends”) in the Offer to Purchase is incorporated herein by
reference.
(e) Not applicable.
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1
December
21, 2007 was the last full
trading day before AmBev’s announcement of the Offer.
ITEM
3. IDENTITY AND BACKGROUND OF FILING PERSON.
(a)
The name, business address and business telephone number of Quinsa, which is
the
subject company and the entity filing this statement, are set forth above under
Item 2. Quinsa’s Internet address is
www.quinsa.com. Information contained on Quinsa’s website does not
constitute a part of this Transaction Statement. The website address
is an inactive text reference and is not intended to be an actual link to the
website.
(b)
The information set forth in the Offer to Purchase in Section 8 (“The Offer –
Certain Information Concerning the Company and the Offeror”) is incorporated
herein by reference. During the last five years, Quinsa has not been
convicted in a criminal proceeding or been party to a civil proceeding of a
judicial or administrative body of competent jurisdiction and as a result of
such proceeding was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to, federal
or state securities laws or finding any violation with respect to such
laws.
(c)
The information set forth in the Company’s Annual Report on form 20-F for the
year ended December 31, 2006 (the “2006 Form 20-F”) in Item 6 (“Directors,
Senior Management and Employees –Directors and –Senior Management”) and in the
Offeror’s Annual Report on form 20-F for the year ended December 31, 2006 in
Item 6 (“Directors, Senior Management and Employees – A. Directors and Senior
Management”) is incorporated herein by reference. Effective December
31, 2007, Mr. Gustavo Castelli resigned as Chief Financial Officer of the
Company. Effective as of January 1, 2008, Mr. Miguel Gómez Eiriz was
elected as the new Chief Financial Officer of the Company. Prior to
becoming Chief Financial Officer of Quinsa, Mr. Gómez Eiriz served as general
manager of Cervecería Boliviana Nacional S.A., a subsidiary of Quinsa in
Bolivia, since 2003. He also served as chief financial officer of
BAESA, general manager of Paraguay Refrescos S.A. and controller of
Quinsa. He joined the Company in 1990. Mr. Gómez Eiriz
holds a CPA degree from the Catholic University of Argentina. During
the last five years, none of the current directors or executive officers of
the
Company have been convicted in a criminal proceeding or been party to a civil
proceeding of a judicial or administrative body of competent jurisdiction and
as
a result of such proceeding was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any violation with
respect to such laws. According to the Offer to Purchase, during the
last five years, none of the current directors or executive officers of the
Offeror have been convicted in a crinimal proceeding or been party to a civil
proceeding of a judicial or administrative body of competent jurisdiction and
as
a result of such proceeding was or is subject to a judgment, decree, or final
order enjoining future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any violation with
respect to such laws.
ITEM
4. TERMS OF THE TRANSACTION.
(a)
The terms of the Offer are described by the Offeror in the Offer to Purchase,
and the information set forth in the following sections of the Offer to Purchase
is incorporated herein by reference:
- Summary
Term Sheet;
- Section
A (“Special Factors - Purpose of the Offer; Certain Effects of the
Offer”);
- Section
D (“Special Factors - United States Federal Income Tax
Consequences”);
- Section
E (“Special Factors - Luxembourg Income Tax Consequences”);
- Section
1 (“The Offer - Number of Shares”);
- Section
2 (“The Offer - Procedures for Tendering Shares and ADSs”);
- Section
3 (“The Offer - Withdrawal Rights”);
- Section
4 (“The Offer - Purchase of Shares and ADSs and Payment of Purchase
Price”);
- Section
10 (“The Offer - Interest of Directors and Executive Officers”);
and
- Section
13 (“The Offer - Extension of the Tender Offer; Termination;
Amendment”).
The
information incorporated by
reference is supplemented as follows:
Interests
of Quinsa’s
Directors.
As of January 11, 2008, Dunvegan S.A., an AmBev
subsidiary that also is a Quinsa director, owned 230,920,000 Class A shares
and
12,000,000 Class B shares, which represent approximately 36.97% of the Company’s
outstanding voting shares as of that date and approximately 32.44% of the
Company’s total equity capital. Except for Dunvegan S.A., as of
January 11, 2008, none of Quinsa’s directors and none of its executive officers
held any Class A shares or Class B shares (including ADSs), or any option to
acquire any such shares. Based on Quinsa’s records and on information
provided to it by its directors, executive officers and subsidiaries, neither
Quinsa or any of its affiliates, subsidiaries nor, to the best of its knowledge,
any of its directors and executive officers, nor any associate of any of the
foregoing, has effected any transaction involving Class A shares or Class B
shares or ADSs during the 60 days prior to January 11, 2008.
ITEM
5. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND
AGREEMENTS.
(a)
The information set forth in Item 7 (“Major Shareholders and Related Party
Transactions – Related Party Transactions”) of the 2006 Form 20-F is
incorporated herein by reference. During 2007, the transactions
between the Company and related parties were substantially of the same type
and
with the same related parties as disclosed in the 2006 Form 20-F. The
amounts of these related party transactions for 2007 are not yet available
to
the Company; however, the Company estimates that there will be no material
increase in the aggregate amount of these related party transactions in 2007
as
compared to the comparable transactions for 2006.
(b)
The information set forth in Section 9 (“The Offer - Past Contacts,
Transactions, Negotiations and Agreements between AmBev and the Company”) in the
Offer to Purchase is incorporated herein by reference.
(c)
The information set forth in Section 9 (“The Offer - Past Contacts,
Transactions, Negotiations and Agreements between AmBev and the Company”) in the
Offer to Purchase is incorporated herein by reference.
(e)
The information set forth in Section 9 (“The Offer - Past Contracts,
Transactions, Negotiations and Agreements between AmBev and the Company”) and 10
(“The Offer - Interest of Directors and Executive Officers”) in the Offer to
Purchase is incorporated herein by reference.
The
information incorporated by
reference is supplemented as follows:
Except
as otherwise set forth in the
Offer to Purchase or the 2006 Form 20-F, neither Quinsa nor, to the best of
its
knowledge, any of its affiliates, directors or executive officers is a party
to
any contract, arrangement, understanding or relationship with any person
relating, directly or indirectly, to the Offer or with respect to the Company’s
securities including, but not limited to, any contract, arrangement,
understanding or relationship concerning the transfer or the voting of the
securities, joint ventures, loan or option arrangements, puts or calls,
guarantees against loss or the giving or withholding of proxies or
authorizations.
ITEM
6. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS.
(b)
and (c)(1) through (8) The Offeror describes its use of the securities acquired
and its plans in the Offer to Purchase. The information set forth in
the Summary Term Sheet and in Sections A (“Special Factors - Purpose of the
Offer; Certain Effects of the Offer”) and 8 (“The Offer - Certain Information
Concerning the Company and the Offeror”) in the Offer to Purchase is
incorporated herein by reference.
ITEM 7. PURPOSES, ALTERNATIVES, REASONS AND
EFFECTS.
(a)
through (c) The information set forth in the Offer to Purchase in Section
A
(“Special Factors - Purpose of the Offer; Certain Effects of the Offer - Plans
for the Company”) is incorporated herein by reference.
The
information incorporated by
reference is supplemented as follows:
Purpose
of the Offer.
According to the Offer to Purchase, the purpose of the Offer is to acquire
any
and all of the outstanding Class A shares and Class B shares of the Company
(including Class B shares held as ADSs) that are not owned by AmBev or its
affiliates. According to the Offer to Purchase, the acquisition
transaction has been structured as a cash tender offer and the Offeror did
not
consider any alternatives to the Offer. The Offeror did not discuss
with Quinsa, its management or its directors the terms of the Offer or any
other
acquisition transaction prior to announcing the Offer.
Recommendation.
Quinsa’s
Board of Directors (the “Board”) has determined unanimously to recommend that
all of the Company’s shareholders other than AmBev and its affiliates tender
their shares in the Offer. The reasons for this recommendation, the
factors taken into account by the Board, and the effect of the Offer on the
Company and the Company’s shareholders are described in “Item 8. Fairness of the
Transaction”.
Plans
for the
Company
. While the implementation of AmBev’s plans to delist the
Company’s Class A shares and the Company’s Class B shares from the LSE, to
delist the ADSs from the NYSE, to terminate the ADS facility and, as and
when
permitted by applicable law and regulation, to terminate the registration
of the
Class B shares under the Exchange Act will require the approval of the Board,
shareholders should be aware that AmBev controls all appointments to the
Board.
(d) The information set forth in the Offer to Purchase in the Summary Term
Sheet, and in Sections A (“Special Factors - Purpose of the Offer; Certain
Effects of the Offer”), D (“Special Factors - United States Federal Income Tax
Consequences”) and E (“Special Factors - Luxembourg Income Tax Consequences”) of
the Offer to Purchase is incorporated herein by reference.
ITEM 8. FAIRNESS OF THE TRANSACTION.
(a) through (f) The information set forth in the Offer to Purchase in
the Summary Term Sheet, in Sections B (“Special Factors - Position of the
Offeror Regarding Fairness of the Offer”), F (“Special Factors - Reports,
Opinions, Appraisals and Negotiations”), and 9
(
“The Offer - Past Contracts,
Transactions, Negotiations and Agreements between AmBev and the Company”) and
“Opinion of Citigroup Global Markets Inc. as Financial Adviser to the Company’s
Board of Directors in connection with the Offer” and “Presentation by Citigroup
Global Markets Inc. to the Board of Directors of the Company on January 14,
2008” (attached hereto as Exhibits (c)(i) and (c)(ii), respectively) is
incorporated herein by reference.
The
information incorporated by reference is supplemented as
follows:
During
the
week prior to AmBev’s announcement that it intended to make the Offer,
representatives of AmBev informed certain members of Quinsa’s management that
AmBev was considering entering into discussions with certain of Quinsa’s
shareholders with respect to the possibility of AmBev making a tender offer
for
the Quinsa shares not owned by AmBev and of such shareholders agreeing to
tender
their shares in the offer. AmBev did not disclose to Quinsa any
proposed terms of the possible offer and did not request any information
from
Quinsa or solicit any recommendation or advice from Quinsa or the
Board.
On
December 21, 2007, AmBev announced that its board of directors had approved
a
plan to make the Offer and that Arnhold and S. Bleichroeder Advisers, Punch
Card
Capital and Duma Capital Partners (collectively, the “Shareholder Group”) had
agreed to sell their shares, totaling a 3.22% economic interest in Quinsa
.
On
December 28, 2007, AmBev commenced the Offer.
Purpose
and Effects of the Offer
AmBev
has
indicated in the Offer to Purchase that its purpose and plan is to acquire
all
of the Quinsa shares and ADSs that it does not already own and thereafter
for
Quinsa to delist its Class A shares and its Class B shares from the LSE,
to
delist its ADSs from the NYSE, to terminate its ADS facility and, as and
when
permitted by applicable law and regulation, to terminate the registration
of the
Class B shares under the Exchange Act. If AmBev purchases shares or
ADSs pursuant to the Offer, the liquidity of the Class A shares not tendered
in
the Offer may be substantially reduced and the liquidity of the Class B shares
and the ADSs not tendered in the Offer will be substantially
reduced. The Shareholder Group is obligated under the terms of its
agreements with AmBev to tender all of the shares it owns (as of January
4,
2008, approximately 43% of the Class B shares not owned by AmBev and its
affiliates) in the Offer. Consequently, even if no other Class B
shares were tendered, there would be an over 40% reduction in the market
liquidity of the Class B shares. Moreover, unless the Shareholder
Group breaches its obligations under its agreements with AmBev or certain
other
customary conditions fail to be satisfied, AmBev is obligated to buy the
Shareholder Group’s shares even if the Offer is terminated and no shares are
purchased thereunder.
The
agreements between AmBev and the Shareholder Group prohibit members of the
Shareholders Group from purchasing Quinsa shares for a period of five years
from
the date of the sale of their shares to AmBev. Based on filings on
Schedule 13D made by the Shareholder Group, it appears that members of the
Shareholder Group have been active buyers of the Company’s
shares. Upon the closing of the
transactions
contemplated by the agreements between the Shareholder Group and AmBev, these
shareholders may no longer act as buyers for shares held by shareholders
who
elect not to tender their shares in the Offer.
It
is a
decision of the Board to delist the Class A shares and the Class B shares
from
the LSE, to delist the ADSs from the NYSE, to terminate the ADS facility
and, as
and when permitted by applicable law and regulation, to terminate the
registration of the Class B shares under the Exchange Act, and shareholders
should be aware that AmBev controls all appointments to the Board. If
Quinsa’s shares and ADSs are delisted from the LSE and the NYSE, there may be no
organized trading market for the Company’s securities. Delisting of
the ADSs from the NYSE and termination of the registration of the Class B
shares
under the Exchange Act would terminate the Company’s obligation to publicly
disclose financial and other information regarding its business, its obligation
to have independent directors on the Board, its obligation to maintain an
audit
committee and its obligation to comply with the Sarbanes-Oxley Act, certain
requirements of Luxembourg law and other rules and
regulations.
Except
as
described in the Offer to Purchase and in this Statement, Quinsa has no plans,
proposals or negotiations which relate to or would result in (i) any significant
change in the working conditions of the employees of the Company or its
subsidiaries, (ii) an extraordinary corporate transaction, such as a merger,
reorganization or liquidation involving the Company, (iii) any purchase,
sale or
transfer of a material amount of assets of the Company, (iv) any material
change
in the Company’s present dividend policy, or (v) any other material change in
the Company’s business.
Position
of Quinsa Regarding the Offer
The
Board
met on December 28, 2007 and again on January 14, 2008 to consider the
Offer.
The
December 28 Meeting
Promptly
after AmBev’s press release dated December 21, 2007, the Board began a process
to put itself in a position to advise its shareholders on the Offer and to
recommend whether shareholders should tender their shares in the
Offer.
On
Friday,
December 28, 2007, the Board met to review the announcements made by AmBev
with
respect to the Offer as reflected in AmBev’s press releases dated December 21,
2007 and December 28, 2007 and to select and engage a financial adviser and
legal counsel to advise the Board in connection with its consideration of the
Offer. All of the directors were present. The Board
reviewed a proposal from Citigroup Global Markets Inc. (“Citigroup”) that, among
other matters, disclosed Citigroup’s engagement by the Board in connection with
the tender offer made by AmBev for the Company’s shares in 2007 and the
engagements of Citigroup by AmBev and its affiliates. The Board
reviewed the fact that, in 2007, it had concluded that Citigroup’s prior
relationships with AmBev as of that time did not impair Citigroup’s judgment or
ability to render a fairness opinion to the Board. In particular, the
Board reviewed that it had previously considered the past relationship between
Citigroup and AmBev, including the fact that Citigroup had prepared a report
in
2006 on behalf of AmBev, and that it also had considered the nature of that
relationship, the identity of the persons involved, the scope of the overall
relationship between Citigroup and AmBev as compared to those existing between
AmBev and other investment banking firms having the expertise to provide the
service being requested of Citigroup, and the terms upon which Citigroup was
prepared to render its services. At the December 28 meeting, the
Board reviewed the nature and scope of each engagement or relationship entered
into between Citigroup and AmBev since the time of the Board’s prior analysis
including the fact that Citigroup had acted as a joint bookrunner in a $161
million international bond issuance by an AmBev subsidiary in July
2007. The board also discussed Citigroup’s extensive prior knowledge
of the Company, its expertise in the Company’s industry and its
experience
in advising the Board. After taking all of these factors into
consideration, the Board determined to retain Citigroup. The Board
also decided to retain Davis Polk & Wardwell, as U.S. counsel, and Elvinger,
Hoss & Prussen, as Luxembourg counsel, in connection with the
Offer.
The
January 14 Meeting
On
January
14, 2008, the Board met to review the Offer. All of the directors were present.
The Board reviewed and discussed the terms of the Offer.
Following
this discussion, Citigroup, the financial institution selected by the Board
to
act as its financial adviser in connection with the Offer, made a presentation
to the Board reflecting the valuation analysis that Citigroup had done for
purposes of evaluating the Offer and delivering to the Board an opinion with
respect to the fairness, from a financial point of view, of the consideration
proposed to be paid in the Offer. After completing its presentation, Citigroup
delivered to the Board its written opinion, dated January 14, 2008, to the
effect that, as of the date of the opinion and based on and subject to various
assumptions and limitations described in the opinion, (i) the consideration
offered to holders of Class A shares in the Offer is fair, from a financial
point of view, to the holders of Class A shares and (ii) the consideration
offered to holders of Class B shares (including those held in the form of ADSs)
in the Offer is fair, from a financial point of view, to the holders of Class
B
shares, in each case other than AmBev and its affiliates. A summary of
Citigroup’s written opinion is set forth below.
Recommendation
of the Board of Directors of the Company
After
careful consideration and discussion, at the January 14, 2008 meeting, the
Board
unanimously:
(a)
determined that the Offer is fair to the Company’s shareholders other than AmBev
and its affiliates; and
(b)
decided to recommend that shareholders tender their shares in the
Offer.
Reasons
for the Board’s recommendation
In
unanimously determining that the Offer is fair and recommending that
shareholders tender their shares in the Offer, the Board considered a number
of
factors, including, but not limited to, the factors described
below:
|
·
|
Citigroup’s
financial presentation and analysis, including its opinion, dated
January
14, 2008, to the Board as to the fairness from a financial point
of view
(as of the date of the opinion) of the consideration offered to holders
of
Class A shares and Class B shares (including those represented by
ADSs) in
the Offer, as more fully described in the section below under the
heading
“Opinion of Citigroup Global Markets Inc.”, which financial presentation
and analysis was adopted by the
Board;
|
|
·
|
The
Offer price is the result of an arms length negotiation between AmBev
and
three of the Company’s largest shareholders, none of whom are affiliated
with AmBev;
|
|
·
|
As
of December 21, 2007, the last full trading day before AmBev’s
announcement of the Offer, to Quinsa’s knowledge, the Offer price
represented the highest price per share ever paid for the Company’s stock
in an open market transaction on either the NYSE or the LSE or in
a
privately negotiated transaction since the Company has been listed
on the
LSE and the NYSE;
|
|
·
|
The
Offer price represents a premium of 21.25% over the last reported
ADS
price, 21.16% over the last reported Class B share price and 21.27%
over
the last reported Class A share price on December 21, 2007, the last
full
trading day before AmBev’s announcement of the
Offer;
|
|
·
|
As
of December 21, 2007, the last full trading day before AmBev’s
announcement of the Offer, the Offer price represented a 4.05% premium
over the then highest reported price for the ADSs on the NYSE ($78.09
on
July 9, 2007);
|
|
·
|
As
of December 21, 2007, the last full trading day before AmBev’s
announcement of the Offer, the Offer price represented a 9.78% premium
over the then highest reported trading price for the Company’s Class B
shares on the LSE ($37.00 on April 3,
2007);
|
|
·
|
As
of December 21, 2007, the last full trading day before AmBev’s
announcement of the Offer, the Offer price represented a 4.10% premium
over the then highest trading price ever recorded for the Company’s Class
A shares on the LSE ($3.90 on March 29,
2007);
|
|
·
|
The
Offer price falls within the range of fairness under each valuation
methodology employed by Citigroup;
|
|
·
|
There
is limited market liquidity for the Company’s shares and this liquidity
will be reduced as a result of the terms of the agreements between
AmBev
and the Shareholder Group because, with limited exceptions, these
agreements require the Shareholder Group to sell its shares to AmBev
even
if no shares are tendered pursuant to the Offer and prohibit the
Shareholder Group from buying the Company’s shares for five
years;
|
|
·
|
The
members of the Board who are not employees of AmBev and its affiliates
have unanimously agreed with the actions taken by the Board as a
whole;
|
|
·
|
The
Board retained counsel not affiliated with AmBev to represent it
in
connection with its consideration of the
Offer;
|
|
·
|
AmBev
has indicated that it has plans for Quinsa to delist the Class A
shares
and the Class B shares from the LSE, to delist the ADSs from the
NYSE, to
terminate the ADS facility and, as and when permitted by applicable
law
and regulation, to terminate the registration of the Class B shares
under
the Exchange Act. If these actions are taken, there may not be
any organized trading market in which shareholders who elect not
to tender
their shares may later dispose of their shares. Accordingly,
the Board therefore concluded that the Offer represents a good opportunity
for the Company’s shareholders other than AmBev and its affiliates to
tender their shares in the Offer;
|
|
·
|
Shareholders
who wish to retain an investment in Quinsa may do so by investing
the
proceeds of the Offer in AmBev or
InBev;
|
|
·
|
The
Offer provides the Company’s shareholders who are considering selling
their Class A shares or Class B shares with the opportunity to sell
their
shares at the Offer price without incurring the transaction costs
typically associated with market sales;
and
|
|
·
|
The
consideration to be paid to the Company’s shareholders consists entirely
of cash.
|
When
assessing the conclusions and recommendations of the Board contained in this
Statement, shareholders should be aware that the Board is comprised of seven
persons all of whom have been appointed by AmBev and that the AmBev controlled
Board appoints all of the members of the
Company’s
senior management. Of these directors, (i) three are related to AmBev
(either as employees, officers, directors or subsidiaries of AmBev), (ii) three
are independent (as such term is defined under the Sarbanes Oxley Act of 2002)
and (iii) one director is a former officer of AmBev. All of these
directors participated in the analysis and review of the Offer and voted in
favor of determining that the Offer is fair, from a financial point of view,
to
the Company’s shareholders other than AmBev and its affiliates and in
recommending that its shareholders tender their shares in the Offer. The Board
decided not to establish a special committee for the purposes of evaluating
the
fairness of the Offer or engaging in any negotiations with AmBev. No
such action is required by Luxembourg law.
The
directors of the Company who are employees or nominees of AmBev, may have
divided loyalties. As directors their obligation is to act in the best interest
of the Company and its shareholders. However, as AmBev employees or nominees,
these directors may have loyalties to AmBev as well. Shareholders should take
this potential for divided loyalties into account in assessing the Board’s
recommendation with respect to the Offer.
When
evaluating the Offer and the recommendation of the Board with respect to it,
shareholders also should be aware that, while the Company retained counsel
different from counsel representing AmBev to provide separate legal advice
to
the Company and its directors in connection with the Offer, counsel to Quinsa
did not report to the independent directors separately or to persons
unaffiliated with AmBev and counsel to Quinsa did not engage, on behalf of
the
Company’s minority shareholders, in any independent negotiations with AmBev or
AmBev’s counsel regarding the transaction or the Offer
price. Furthermore, counsel to Quinsa did not participate in
negotiations between AmBev and the Shareholder Group.
The
Offer
price was determined by AmBev and the Shareholder Group, without consultation
with the Board or Quinsa. None of Quinsa, the Board or any or their
respective representatives made any effort to negotiate any increase in the
Offer price. Quinsa did not consider any alternatives to the
Offer.
The
Board
considered the fact of the absence of a special committee of directors, the
facts relating to the legal representation of the Company and the Board, the
absence of negotiations with AmBev and the absence of the consideration of
alternatives before reaching its conclusion as to the fairness of the Offer
and
making its recommendations to shareholders. The Board concluded that, in view
of
the Offer price, the fact that the Offer price was the result of an arms length
negotiation between AmBev and the Shareholder Group and considering the
information available to the Board as set out above, it did not need to take
any
of these additional steps in order to reach its conclusion as to the fairness
of
the Offer.
The
Board
determined the Offer to be fair to the unaffiliated shareholders by (i) engaging
independent financial advisors for the purpose of delivering a fairness opinion,
(ii) obtaining unanimous approval of the Offer by the independent directors
of
the Board, and (iii) considering the fact that the Offer price was the result
of
an arms length negotiation between AmBev and the Shareholder Group.
The
foregoing discussion of the factors considered by the Board in connection with
the transaction is not intended to be exhaustive but is believed to include
all
material factors considered by it. The Board did not assign any specific weights
to the factors listed above. Rather, its fairness determination and
recommendation to shareholders was made after consideration of all of the
foregoing factors as a whole.
Certain
Projections
Summary
Financial Projections — In Nominal US$ Million
The
table
below sets forth a summary of the financial projections prepared by the
Company’s management for fiscal years 2008 through 2017.
2
These projections were provided by
the Company’s management to Citigroup to assist Citigroup in its
analysis.
|
|
|
Projected
Fiscal Year Ending
December 31,
|
|
|
08E-17E
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Revenues
|
|
$
|
1,521.1
|
|
|
$
|
1,635.6
|
|
|
$
|
1,746.1
|
|
|
$
|
1,805.3
|
|
|
$
|
1,866.2
|
|
|
$
|
1,927.8
|
|
|
$
|
1,988.3
|
|
|
$
|
2,049.2
|
|
|
$
|
2,113.4
|
|
|
$
|
2,179.6
|
|
|
|
4.1
|
%
|
|
COGS
|
|
|
626.3
|
|
|
|
662.7
|
|
|
|
711.2
|
|
|
|
737.4
|
|
|
|
765.0
|
|
|
|
791.9
|
|
|
|
819.7
|
|
|
|
847.1
|
|
|
|
876.6
|
|
|
|
907.0
|
|
|
|
4.2
|
%
|
|
SG&A
|
|
|
333.1
|
|
|
|
337.9
|
|
|
|
333.7
|
|
|
|
342.8
|
|
|
|
347.9
|
|
|
|
355.5
|
|
|
|
362.2
|
|
|
|
373.1
|
|
|
|
383.2
|
|
|
|
392.4
|
|
|
|
1.8
|
%
|
|
EBITDA
|
|
$
|
561.8
|
|
|
$
|
635.0
|
|
|
$
|
701.1
|
|
|
$
|
725.2
|
|
|
$
|
753.3
|
|
|
$
|
780.4
|
|
|
$
|
806.5
|
|
|
$
|
829.0
|
|
|
$
|
853.6
|
|
|
$
|
880.2
|
|
|
|
5.1
|
%
|
|
Depreciation
and
Amortization
|
|
|
58.8
|
|
|
|
74.6
|
|
|
|
88.7
|
|
|
|
102.0
|
|
|
|
115.0
|
|
|
|
127.3
|
|
|
|
138.6
|
|
|
|
149.4
|
|
|
|
160.3
|
|
|
|
171.5
|
|
|
|
12.6
|
%
|
|
EBIT
|
|
$
|
503.0
|
|
|
$
|
560.4
|
|
|
$
|
612.4
|
|
|
$
|
623.2
|
|
|
$
|
638.3
|
|
|
$
|
653.1
|
|
|
$
|
667.8
|
|
|
$
|
679.6
|
|
|
$
|
693.3
|
|
|
$
|
708.7
|
|
|
|
3.9
|
%
|
|
Capex
|
|
|
173.8
|
|
|
|
216.9
|
|
|
|
182.4
|
|
|
|
201.4
|
|
|
|
189.9
|
|
|
|
177.4
|
|
|
|
163.5
|
|
|
|
160.2
|
|
|
|
165.2
|
|
|
|
171.5
|
|
|
|
(0.1
|
%)
|
|
Revenue
Growth
|
|
|
|
|
|
|
7.5
|
%
|
|
|
6.8
|
%
|
|
|
3.4
|
%
|
|
|
3.4
|
%
|
|
|
3.3
|
%
|
|
|
3.1
|
%
|
|
|
3.1
|
%
|
|
|
3.1
|
%
|
|
|
3.1
|
%
|
|
|
|
|
|
EBITDA
Growth
|
|
|
|
|
|
|
13.0
|
%
|
|
|
10.4
|
%
|
|
|
3.4
|
%
|
|
|
3.9
|
%
|
|
|
3.6
|
%
|
|
|
3.3
|
%
|
|
|
2.8
|
%
|
|
|
3.0
|
%
|
|
|
3.1
|
%
|
|
|
|
|
|
EBIT
Growth
|
|
|
|
|
|
|
11.4
|
%
|
|
|
9.3
|
%
|
|
|
1.8
|
%
|
|
|
2.4
|
%
|
|
|
2.3
|
%
|
|
|
2.3
|
%
|
|
|
1.8
|
%
|
|
|
2.0
|
%
|
|
|
2.2
|
%
|
|
|
|
|
|
EBITDA
Margin
|
|
|
36.9
|
%
|
|
|
38.8
|
%
|
|
|
40.2
|
%
|
|
|
40.2
|
%
|
|
|
40.4
|
%
|
|
|
40.5
|
%
|
|
|
40.6
|
%
|
|
|
40.5
|
%
|
|
|
40.4
|
%
|
|
|
40.4
|
%
|
|
|
|
|
|
EBIT
Margin
|
|
|
33.1
|
%
|
|
|
34.3
|
%
|
|
|
35.1
|
%
|
|
|
34.5
|
%
|
|
|
34.2
|
%
|
|
|
33.9
|
%
|
|
|
33.6
|
%
|
|
|
33.2
|
%
|
|
|
32.8
|
%
|
|
|
32.5
|
%
|
|
|
|
|
|
Cash
&
Equivalents
|
|
$
|
396.3
|
|
|
$
|
260.2
|
|
|
$
|
319.3
|
|
|
$
|
232.7
|
|
|
$
|
169.4
|
|
|
$
|
119.4
|
|
|
$
|
139.3
|
|
|
$
|
176.6
|
|
|
$
|
220.1
|
|
|
$
|
268.6
|
|
|
|
|
|
|
Loans
and
Financing
|
|
|
179.0
|
|
|
|
141.6
|
|
|
|
106.8
|
|
|
|
75.1
|
|
|
|
44.2
|
|
|
|
0.0
|
|
|
|
0.0
|
|
|
|
0.0
|
|
|
|
0.0
|
|
|
|
0.0
|
|
|
|
|
|
|
Net
Debt
|
|
|
(217.3
|
)
|
|
|
(118.6
|
)
|
|
|
(212.5
|
)
|
|
|
(157.6
|
)
|
|
|
(125.2
|
)
|
|
|
(119.4
|
)
|
|
|
(139.3
|
)
|
|
|
(176.6
|
)
|
|
|
(220.1
|
)
|
|
|
(268.6
|
)
|
|
|
|
|
|
Shareholders’
Equity
|
|
|
796.9
|
|
|
|
813.3
|
|
|
|
996.8
|
|
|
|
1,033.8
|
|
|
|
1,071.7
|
|
|
|
1,110.4
|
|
|
|
1,150.1
|
|
|
|
1,190.7
|
|
|
|
1,232.1
|
|
|
|
1,274.5
|
|
|
|
|
|
|
Total
Assets
|
|
|
1,809.6
|
|
|
|
1,848.1
|
|
|
|
2,025.6
|
|
|
|
2,051.7
|
|
|
|
2,077.1
|
|
|
|
2,090.9
|
|
|
|
2,149.5
|
|
|
|
2,211.3
|
|
|
|
2,274.5
|
|
|
|
2,338.1
|
|
|
|
2.9
|
%
|
Shareholders
should be aware that financial projections used or prepared by the Company’s
management are predictions of, or indicate, future events and future trends
which do not relate to historical matters and are based on current plans,
estimates and projections, and therefore undue reliance should not be placed
upon them. Such financial projections involve inherent risks, uncertainties
and
assumptions. If these risks or uncertainties ever materialize or the
assumptions prove incorrect, or if a number of important factors occur or do
not
occur, actual results may differ materially from those expressed or
implied.
Opinion
of Citigroup Global Markets Inc.
Citigroup
was retained by the Company to act as financial adviser to the Board in
connection with the Offer. In connection with this engagement, at a meeting
of
the Company’s board of directors held on January 14, 2008 to evaluate the
transaction, Citigroup rendered its oral opinion, which was confirmed by
delivery of a written opinion dated the same date, to the effect that, as of
the
date of the opinion and based upon and subject to the considerations and
limitations set forth in the opinion, (i) the consideration offered to holders
of Class A shares in the Offer is fair, from a financial point of view, to
the
holders of Class A shares and (ii) the consideration offered to holders of
Class
B shares in the Offer is fair, from a financial point of view, to the holders
of
Class B shares, in each case other than AmBev and its affiliates.
The
full
text of Citigroup’s opinion, which sets forth the assumptions made, general
procedures followed, matters considered and limitations on the review
undertaken, is attached hereto as Exhibit (c)(i). The summary of Citigroup’s
opinion set forth below is qualified in its entirety by reference to the full
text of the opinion.
Holders of Class A shares and Class B shares are
urged to read the Citigroup opinion carefully and in its
entirety.
__________
2
Based
on proportional consolidation of
the stake held by Quilmes International (Bermuda) Ltd. ("QIB") in each operating
subsidiary and assuming 100% consolidation of QIB.
Citigroup’s
opinion was limited solely to the fairness of the consideration from a financial
point of view as of the date of the opinion. Neither Citigroup’s opinion nor the
related analyses constituted a recommendation of the Offer to the Board.
Citigroup makes no recommendation to any shareholder regarding how such
shareholder should vote or act on any matters relating to the
Offer.
In
arriving at its opinion, Citigroup:
|
·
|
reviewed
the Offer to Purchase;
|
|
·
|
held
discussions with certain senior officers, directors and other
representatives and advisers of the Company concerning the business,
operations and prospects of the
Company;
|
|
·
|
examined
certain publicly available business and financial information relating
to
the Company; examined certain financial forecasts and other information
and data relating to the Company, which were provided to or discussed
with
Citigroup by the Company’s
management;
|
|
·
|
reviewed
the financial terms of the Offer as set forth in the Offer to Purchase
in
relation to, among other things, current and historical market prices
and
trading volumes of Class B shares, and the Company’s historical and
projected earnings and other operating data, capitalization and financial
condition of the Company;
|
|
·
|
considered,
to the extent publicly available, the financial terms of certain
other
transactions which Citigroup considered relevant in evaluating the
Offer;
|
|
·
|
analyzed
certain financial, stock market and other publicly available information
relating to the businesses of other companies whose operations Citigroup
considered relevant in evaluating those of the Company;
and
|
|
·
|
conducted
such other analyses and examinations and considered such other information
and financial, economic and market criteria as Citigroup deemed
appropriate in arriving at its
opinion.
|
In
rendering its opinion, Citigroup assumed and relied, without independent
verification, upon the accuracy and completeness of all financial and other
information and data publicly available or provided to or otherwise reviewed
by
or discussed with it and upon the assurances of the Company’s management that
they were not aware of any relevant information that was omitted or that
remained undisclosed to Citigroup. With respect to financial forecasts and
other
information and data relating to the Company provided to or otherwise reviewed
by or discussed with Citigroup, Citigroup was advised by the Company’s
management that such forecasts and other information and data were reasonably
prepared on bases reflecting the best currently available estimates and
judgments of the Company’s management as to the future financial performance of
the Company. Citigroup assumed, with the Company’s consent, that the Offer will
be consummated in accordance with the terms described in the Offer to Purchase,
without waiver, modification or amendment of any material term, condition or
agreement and that, in the course of obtaining the necessary regulatory or
third
party approvals, consents and releases for the Offer, no delay, limitation,
restriction or condition will be imposed that would have an adverse effect
on
the Company or the Offer. Citigroup has assumed that there are no distinctions
between the Class A shares and Class B shares (other than that each Class B
share equals 10 Class A shares), and with the Company’s consent has not
conducted any investigation with respect to the relative rights applicable
to
the different classes of shares.
Citigroup
did not make, and it was not provided with, an independent evaluation or
appraisal of the assets or liabilities, contingent or otherwise, of the Company,
and did not make any physical inspection of
the
properties or assets of the Company. Citigroup was not requested to,
and it did not, solicit third party indications of interest in the possible
acquisition of all or a part of the Company. Citigroup expresses no
view as to, and Citigroup’s opinion does not address, the relative merits of the
Offer as compared to any alternative business strategies that might exist for
the Company or the effect of any other transaction in which the Company might
engage. Citigroup also expresses no view as to, and the Citigroup
opinion does not address, the fairness (financial or otherwise) of the amount
or
nature or any other aspect of any compensation to any officers, directors or
employees of Quinsa or AmBev, or any class of such persons, relative to the
consideration offered to the holders of the Class A shares and the Class B
shares in the Offer. Citigroup’s opinion is necessarily based upon
information available to Citigroup, and financial, stock market and other
conditions and circumstances existing, as of the date of the
opinion.
In
preparing its opinion, Citigroup performed a variety of financial and
comparative analyses, including those described below. The summary of
these analyses is not a complete description of the analyses underlying
Citigroup’s opinion. The preparation of a financial opinion is a
complex analytical process involving various determinations as to the most
appropriate and relevant methods of financial analysis and the application
of
those methods to the particular circumstances and, therefore, a financial
opinion is not readily susceptible to summary description. Citigroup
arrived at its ultimate opinion based on the results of all analyses undertaken
by it and assessed as a whole, and did not draw, in isolation, conclusions
from
or with regard to any one factor or method of analysis for purposes of its
opinion. Accordingly, Citigroup believes that its analyses must be
considered as a whole and that selecting portions of its analyses and factors
or
focusing on information presented in tabular format, without considering all
analyses and factors or the narrative description of the analyses, could create
a misleading or incomplete view of the processes underlying its analyses and
opinion.
In
its
analyses, Citigroup considered industry performance, general business, economic,
market and financial conditions and other matters existing as of the date of
its
opinion, many of which are beyond the control of the Company. No
company, business or transaction used in those analyses as a comparison is
identical to the Company, and an evaluation of those analyses is not entirely
mathematical. Rather, the analyses involve complex considerations and judgments
concerning financial and operating characteristics and other factors that could
affect the acquisition, public trading or other values of the companies,
business segments or transactions analyzed.
The
estimates contained in Citigroup’s analyses and the valuation ranges resulting
from any particular analysis are not necessarily indicative of actual values
or
predictive of future results or values, which may be significantly more or
less
favorable than those suggested by its analyses. In addition, analyses
relating to the value of businesses or securities do not necessarily purport
to
be appraisals or to reflect the prices at which businesses or securities
actually may be sold. Accordingly, the estimates used in, and the results
derived from, Citigroup’s analyses are inherently subject to substantial
uncertainty.
AmBev
announced on December 21, 2007 that it entered into stock purchase agreements
with three of the Company’s largest shareholders (other than AmBev and its
affiliates), representing as of that date approximately a 3.22% economic
interest in the Company, to purchase, subject to certain conditions, the
outstanding shares held by such shareholders in the Offer.
Citigroup’s
opinion was only one of many factors considered by the Board in its evaluation
of the Offer and should not be viewed as determinative of the views of the
Board
or the Company’s management with respect to the consideration payable in the
Offer.
The
following is a summary of the material financial analyses presented to the
Board
in connection with Citigroup’s opinion.
The financial
analyses summarized below include information presented in tabular format.
In
order to fully understand Citigroup’s financial analyses, the tables must be
read together with the text of each summary. The tables alone do not constitute
a complete
description
of the financial analyses. Considering the data below without considering the
full narrative description of the financial analyses, including the
methodologies and assumptions underlying the analyses, could create a misleading
or incomplete view of Citigroup’s financial analyses.
Fifty-Two
Week Trading Range
Citigroup
reviewed the historical trading price for the ADRs during the 12-month period
ended December 21, 2007, which is the day that AmBev’s board of directors
announced (after the closing of the stock market) that it had approved a plan
to
make a voluntary offer for any and all Class A shares and Class B shares of
Quinsa, during which period the range of closing per ADR prices in Class B
shares equivalent was $32.00 to $40.88. Citigroup noted that the
consideration of $40.625 for each Class B share represented a premium of
approximately 21% over the closing per ADR price in Class B shares equivalent
on
December 21, 2007, which was $33.51, and a premium of approximately 27% over
the
low closing per ADR price in Class B shares equivalent during the 12-month
period.
Comparable
Companies Analysis
Citigroup
compared financial, operating, stock market information and forecasted financial
information for the Company with selected publicly traded companies that operate
in the brewing sector. The selected comparable companies considered
by Citigroup were:
Latin
American Companies
International
Companies
Citigroup
derived firm value as a multiple of estimated earnings before interest, taxes,
depreciation and amortization, or EBITDA, for 2008 for the Company and each
of
the comparable companies. Citigroup calculated firm value as (a)
equity value, based on the per share price and fully diluted shares outstanding
as reflected on each company’s latest publicly available information, assuming
the exercise of all in-the-money options, warrants and convertible securities
outstanding, less the proceeds from such exercise; plus (b) non-convertible
indebtedness; plus (c) non-convertible preferred stock; plus (d) minority
interests; minus (e) cash and cash equivalents.
Estimated
financial data for the selected companies were based on mean estimates as of
January 4, 2008 from the Institutional Brokerage Estimate System, a data service
that compiles Wall Street research
analysts’
estimates, Bloomberg, FactSet and other publicly available information of the
selected companies. Estimated financial data for the Company were
based on estimates prepared internally by the Company’s management, referred to
as the management estimates, for 2008.
The
following chart sets forth the firm value/EBITDA multiples derived by Citigroup,
as of January 4, 2008:
|
|
|
|
AmBev
|
8.5x
|
|
CCU
|
7.7x
|
|
Grupo
Modelo
|
7.6x
|
|
Femsa
|
6.9x
|
|
Latin
American mean
|
7.7x
|
|
InBev
|
10.3x
|
|
Anheuser
Busch
|
8.4x
|
|
Carlsberg
|
7.4x
|
|
Heineken
|
7.1x
|
|
SABMiller
|
6.3x
|
|
International
mean
|
7.4x
|
E
=
Estimated
Based
on
the information for comparable companies, Citigroup calculated a range of
implied firm values of $3,655 million to $4,699 million and an implied equity
value range of $3,752 million to $4,796 million. This analysis
resulted in an implied equity value per Class B share equivalent for the Company
of $34.68 to $44.33. Citigroup noted that the consideration of $40.625 per
Class
B share was within this range.
Precedent
Transaction Analysis
Citigroup
reviewed publicly available information for 20 completed negotiated (i.e.,
non-hostile) minority squeeze-out transactions involving publicly traded
companies announced from February 2001 through May 2007, with transaction values
above $100 million in the United States. For each selected precedent
transaction, Citigroup derived the implied premium paid per share of common
stock of the target company relative to: (a) the closing per share price of
the
target company common stock one day prior to the announcement of the transaction
and (b) the closing per share price of the target company common stock
four-weeks prior to the announcement of the transaction.
The
selected transactions reviewed by Citigroup were (in each case, the target
company is listed first, followed by the acquirer):
|
·
|
Great
American Financial Resources/American Financial
Group
|
|
·
|
21st
Century Insurance/American International Group
Inc.
|
|
·
|
ev3
Inc./Micro Therapeutics Inc.
|
|
·
|
New
Valley Corp./Vector Group
|
|
·
|
7-Eleven
Inc./IYG Holdings & SEJ
|
|
·
|
Tipperary
Corp./Santos Ltd.
|
|
·
|
Eon
Labs Inc./Novartis AG
|
|
·
|
Genencor
International/Danisco A/S
|
|
·
|
Cox
Communications/Cox Enterprises
|
|
·
|
AMC
Entertainment/Investor Group
|
|
·
|
barnesandnoble.com
Inc./Barnes & Noble Inc.
|
|
·
|
Ribapharm/ICN
Pharmaceuticals
|
|
·
|
International
Specialty Prods/Samuel J. Heyman
|
|
·
|
Travelocity.com/Sabre
Holdings
|
|
·
|
NCH
Corp./Investor Group
|
|
·
|
Liberty
Financial/Liberty Mutual Ins.
|
|
·
|
Unigraphic
Solutions/EDS
|
|
·
|
Westfield
America/Westfield America Trust
|
The
following table sets forth the results of these analyses:
|
|
Precedent
Transaction
Premiums
|
|
|
|
|
|
|
1
Day Prior to Announcement
|
26.3%
|
|
24.9%
|
|
4
Weeks Prior to Announcement
|
27.4%
|
|
23.8%
|
Based
on
these data and its judgment and experience, Citigroup applied a premium range
of
approximately 20% to 30% to the closing per ADR price in Class B shares
equivalent on December 21, 2007, of $33.51 and to the closing price per ADR
price for Class B shares equivalent four weeks prior to the announcement of
the
proposed transaction of $33.04, and derived an average range of approximately
$39.92 to $43.25 for the implied equity value per share of a Class B share
equivalent. Citigroup also applied a premium range of approximately
20% to 30% to the closing per ADR price in Class B shares equivalent on November
7, 2006, one day prior to the announcement by AmBev that its board of directors
had
approved a plan to make a voluntary offer for any and all Class A shares and
Class B shares of Quinsa, of $29.83 and to the closing price per ADR price
for
Class B shares equivalent four weeks prior to November 7, 2006 and derived
an
average range of approximately $33.65 to $36.45 for the implied equity value
per
share of a Class B share equivalent.
Based
on
these premiums paid analyses, Citigroup noted that the consideration of $40.625
per Class B share was within the range derived by Citigroup for the implied
equity value per Class B shares equivalent based on December 21, 2007, which
was
the day on which the Offer was announced after the closing of the stock
market.
Discounted
Cash Flow Analysis
Citigroup
performed a discounted cash flow analysis to calculate the estimated present
value of the standalone unlevered, after-tax free cash flows that the Company
could generate based on the Company’s 2008 budget and on operating and financial
projections of the Company’s management for fiscal years 2009 through
2017. The Company’s operating projections were prepared for each of
the countries in which the Company operates and the projections do not include
any potential synergies arising from the Offer. Estimated terminal
values for the Company were calculated by applying to the Company’s fiscal year
2017 EBITDA, based on management’s estimates, a range of EBITDA terminal value
multiples of 7.5x to 8.5x. The unlevered, after-tax free cash flows
and terminal values were then discounted to present value using discount rates
ranging from 10.5% to 11.5%, which discount range was derived taking into
account the estimated weighted average cost of capital for the Company utilizing
selected data of the Company and certain of the publicly held companies in
the
brewing sector referred to above under “Comparable Companies
Analysis.” This analysis indicated the following range of implied
equity value per Class B share equivalent of the Company:
|
Implied
Price Per Class B share equivalent
|
$38.22
- $43.69
|
Citigroup
noted that the consideration of $40.625 per Class B share was within the range
of implied share prices that resulted from this analysis.
Miscellaneous
Under
the
terms of Citigroup’s engagement letter, dated December 29, 2007, the Company has
agreed to pay Citigroup a fee of $200,000 for delivering its opinion, which
fee
was payable upon delivery of Citigroup’s opinion. The Company also
has agreed to indemnify Citigroup and related persons against liabilities,
including liabilities under the federal securities laws, arising out of its
engagement.
Citigroup
has in the past provided services to AmBev unrelated to the Offer, for which
services Citigroup received compensation, including, without limitation (1)
providing to AmBev a valuation report meeting the requirements of applicable
Brazilian corporation law in connection with AmBev’s acquisition in April 2006
from Beverage Associates (BAC) Corp. of Class A shares of the Company; (2)
acting as joint bookrunner in a US$161 million international bond issuance
by an
AmBev subsidiary in July 2007; and (3) acting as joint bookrunner in AmBev’s
US$955 million issuance of debentures in Brazil in August 2006. In
addition, Citigroup and its affiliates in the past have provided services to
the
Company unrelated to the Offer, for which services Citigroup and its affiliates
have received compensation, including, without limitation, acting as financial
advisor to the Company and rendering a fairness opinion to the Company’s board
of directors in connection with AmBev’s voluntary offer in January 2007 to
purchase all outstanding Class A shares, Class B shares and ADSs not owned
by
AmBev and its affiliates. In addition, Citigroup’s affiliates engaged
in the commercial lending business also act as lenders to AmBev, the Company
and
their respective affiliates, for which services Citigroup’s affiliates receive
compensation. In
the ordinary course of business, Citigroup and its affiliates may actively
trade
or hold the securities of the Company and AmBev for their own account or for
the
account of customers and, accordingly, may at any time hold a long or short
position in those securities. In addition, Citigroup and its
affiliates, including Citigroup Inc. and its affiliates, may maintain
relationships with the Company, AmBev and their respective
affiliates.
The
Company selected Citigroup as its financial adviser in connection with the
Offer
based on Citigroup’s reputation, experience and familiarity with the Company and
its business. Citigroup is an internationally recognized investment
banking firm which regularly engages in the valuation of businesses and their
securities in connection with mergers and acquisitions, negotiated
underwritings, competitive bids, secondary distributions of listed and unlisted
securities, private placements and valuations for estate, corporate and other
purposes.
ITEM 9. REPORTS, OPINION, APPRAISALS AND
NEGOTIATIONS.
(a), (b) and (c) See Item 8 above and the “Opinion of Citigroup Global Markets
Inc. as Financial Adviser to the Company’s Board of Directors in connection with
the Offer” and “Presentation by Citigroup Global Markets Inc. to the Board of
Directors of the Company on January 14, 2008”, attached hereto as Exhibits
(c)(i) and (c)(ii), respectively. In addition, the information set forth
in the
Offer to Purchase in Sections C (“Special Factors - Position of the Company
Regarding Fairness of the Offer”) and F (“Special Factors - Reports, Opinions,
Appraisals and Negotiations”) is hereby incorporated by
reference.
ITEM 10. SOURCE AND AMOUNT OF FUND OR OTHER
CONSIDERATION.
(a)
The sources and amount of funds is described by the Offeror in the Offer
to
Purchase. The information set forth in Section 7 (“The Offer – Source
and Amount of Funds”) in the Offer to Purchase is incorporated herein by
reference.
(c) The Company has paid Citigroup $200,000 for delivering its
opinion. The Company has also agreed to pay the fees of its legal
advisers, Davis Polk & Wardwell and Elvinger, Hoss & Prussen, which are
expected to be $450,000. No other fees or expenses have been paid or
are payable by the Company in connection with this transaction. The
information set forth in Section 14 (“The Offer - Fees and Expenses”) is
incorporated herein by reference.
(d)
Not applicable.
ITEM
11. INTERESTS IN SECURITIES OF THE SUBJECT
COMPANY
(a)
and
(b) The information set forth in Sections 8 (“The Offer – Certain Information
Concerning the Company and the Offeror”), 9 (“The Offer – Past Contracts,
Transactions, Negotiations and Agreements between AmBev and the Company) and
10
(“The Offer - Interest of Directors and Executive Officers”) in the Offer to
Purchase is incorporated herein by reference. See the information
included in response to Item 4 above.
ITEM 12. THE SOLICITATION OR
RECOMMENDATION.
(d) Except as set forth in this Transaction Statement and Section 8 (“The
Offer – Certain Information Concerning the Company and the Offeror”) in the
Offer to Purchase, as of January 11, 2008, none of Quina’s directors, Quinsa’s
executive officers, or AmBev or its affiliates own any Class A shares or
Class B
shares (including ADSs). AmBev and its affiliates (including Dunvegan
S.A.) will not, directly or indirectly, tender any Class A shares or Class
B
shares or ADSs pursuant to the Offer.
(e) The information set forth in Section B (“Special Factors - Position of
the Offeror regarding fairness of the Offer”) is incorporated herein by
reference.
See
the information set forth in
response to Item 8 above.
ITEM 13. FINANCIAL INFORMATION.
(a)
The audited financial statements of Quinsa as of and for the two fiscal years
ended December 31, 2005, and December 31, 2006, are hereby expressly
incorporated herein by reference to the 2006 Form 20-F, filed with the SEC
on September 14, 2007. The unaudited financial information of Quinsa as of
and
for the six months ended June 30, 2006 and June 30, 2007, is hereby incorporated
herein by reference to Quinsa’s Report of Foreign Issuer on Form 6-K/A,
filed with the SEC on August 15, 2007.
|
Ratio
of earnings to fixed charges
|
|
|
|
Dec-05
|
Dec-06
|
Jun-07
|
|
Ratio
|
6.0
|
8.2
|
9.4
|
|
Book
Value Per Share (as of June 30, 2007)
|
|
|
Book
Value per Class A share
|
0.68
|
|
Book
Value per Class B share
|
6.80
|
ITEM 14. PERSONS/ ASSETS RETAINED, EMPLOYED, COMPENSATED OR
USED.
(a) The
Company
retained Citigroup to act as financial advisor to the
Board in connection with the Offer. Under the terms of Citigroup’s
engagement letter, dated December 29, 2007, the Company agreed to pay Citigroup
a fee of $200,000 for delivering its opinion, which fee was payable upon
delivery of Citigroup’s opinion. The Company also agreed to indemnify
Citigroup and related persons against liabilities, including liabilities under
the federal securities laws, arising out of its engagement. See “Item
8. Fairness of the Transaction – Miscellaneous”. A copy of the
written opinion of Citigroup attached hereto as Exhibit (c)(i) is incorporated
herein by reference.
The
Company has selected Innisfree
M&A Incorporated to act as Information Agent in connection with the
Offer. The Information Agent may contact holders of shares by mail,
telephone and in person and may request brokers, dealers, commercial banks,
trust companies and other nominee shareholders to forward materials relating
to
the Offer to beneficial owners. The Information Agent will receive
reasonable and customary compensation for their services, be reimbursed for
certain reasonable out-of-pocket expenses and be indemnified against certain
liabilities in connection with the Offer, including certain liabilities under
the federal securities laws.
ITEM
15. ADDITIONAL INFORMATION
ITEM
16. EXHIBITS
|
(a)(5)(i)
|
Press
Release of the Company dated January 14, 2008.
|
|
(c)(i)
|
Opinion
of Citigroup Global Markets Inc. as Financial Adviser to the Company’s
Board of Directors in connection with the Offer
|
|
(c)(ii)
|
Presentation
by Citigroup Global Markets Inc. to the Board of Directors of the
Company
on January 14, 2008
|
After
due
inquiry and to the best of my knowledge, I certify that the information set
forth in this statement is true, complete and correct.
|
|
|
QUILMES
INDUSTRIAL (QUINSA), SOCIÉTÉ ANONYME
|
|
Date:
|
|
|
By:
|
/s/ Miguel
Gomez Eiriz
|
|
|
|
|
|
|
Name:
|
|
|
|
|
|
|
Title:
|
|
|
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