Fitch Ratings said the merger between South African Breweries and Phillip Morris Companies will have a minimal impact on the latter?s credit profile.
?The merger will have minimal impact on Philip Morris Companies Inc.’s credit profile, while substantially increasing the combined entity’s, SABMiller, global competitive position,? the agency said in a statement.
?Fitch rates Philip Morris Companies Inc.’s senior unsecured debt ‘A’ and commercial paper ‘F1’. The Rating Outlook is Stable. Rated debt securities total approximately $23-billion.
On May 30, 2002, Philip Morris announced an agreement to merge its Miller Brewing unit with South African Breweries in a $5,6-billion transaction, including $3,6-billion in stock and $2-billion in Miller Brewing debt.
Under the terms of the deal, Philip Morris will hold approximately 430-million shares, representing a 36% stake in SABMiller. Philip Morris’s voting interest will be 24,99%.
Cash flow to Philip Morris resulting from the transaction of approximately $1,7-billion will be used to accelerate its share repurchase program.
The merger is subject to regulatory review and the approval of South African Breweries plc shareholders. The deal will make SABMiller the world’s second largest brewer.
SABMiller will be a leading player in the consolidating brewing industry with its scale efficiencies, diverse earnings base, broad portfolio of brands and strong distribution system.
Miller Brewing contributed $4,2-billion of operating revenues, or 4,7%, to Philip Morris’s total operating revenues and $481-million of operating income, or 2,8%, to total operating companies income in 2001.
The proposed Miller Brewing transaction is not likely to materially impact Philip Morris’s credit statistics. For the 12 month period ending in March 31, 2002, Philip Morris’s total debt-to-ebitda is 1,2 times and fixed charge coverage is approximately 10,1 times. – Reuters