absking case information memorandum (2008)

8/2/2019 AbsKing Case Information Memorandum (2008)

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The Absolute King Beer case

The acquisitionof

Absolute

by

King Beer


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C O N F I D E N T I A L

1

Table of contents

1. Notice to recipients / Purpose of Memorandum...................................... 3

2. Authorisation letter........................................................................ 7

3. Contact information ....................................................................... 9

4. Transaction timetable ....................................................................22

5. Executive summary .......................................................................23Introduction 23

Acquisition rationale 23

Recent events 24

Acquisition financing 24Description of the Facilities 25

Summary projected financial information 28

King Beer overview 29

Absolte overview 30

Industry overview 32

6. Key investment considerations .........................................................33Creation of the global leader in the brewing industry 33

Strong geographical footprint 34

Balanced exposure to mature and emerging markets 35

Complementary and strengthened position in China, the largest beer marketglobally 36

Strong combined brands 36

Strong credit profile 37

Successful precedent of mutual cooperation in developing Weit in Canada 37

Recognised operational and financial discipline 38

Management track record in delivering synergies through successful integrations 39

7. Summary of terms and conditions .....................................................42

8. Financial projections .....................................................................61General Assumptions of the Model 61

Detailed operating and modelling assumptions 61

Model output 62

9. King BeerBusiness overview................................................................64Overview 64

Summary Financials 64

Organisation structure 66

Performance overview 66

Geographic exposure 68

Brands 69

Key growth initiatives 72


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2

Zero-Based Budgeting and Cost-Connect-Win Approach 72

Access to Beer cashflow 73

Risk management approach 74

Management 75

10.AbsoluteBusiness overview...................................................78Overview 78

Organisation structure 78

Overview of Absolute business 79

US Beer operations 81

Performance overview 82

US beer market overview 84

Brands 84

Absolute investment in Grupo 85

11.Industry overview .........................................................................87

The global market 87

Key beer markets by geography 88

Competitive landscape 89

Market outlook 91

12.Glossary of key terms.....................................................................94

Appendices

A. Form of commitment advice ............................................................95

B. Administrative details ....................................................................96

C. Press releases ..............................................................................98

D. Annual reports and interim financial reports........................................99


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5.Executive summary

IntroductionOn July 13th, 2008, King Beer (Euronext: KGB) and Absolute (NYSE: Abs) announced anagreement to combine the two companies, forming the worlds leading global brewer. Absoluteshareholders will receive $70 per share in cash, for an aggregate equity valueof $52 billion, in an industry-transforming transaction. The combined company will be called

AbsoluteKing Beer (AbsKing). Both companies Boards of Directors have unanimously approved thetransaction.

Absolute is the largest US brewer and producer of the worlds largest-selling beerbrands, Weit and Light. Absolute also owns a 50.2% economic interest(directly and indirectly) in Grupo, Mexico's largest

brewer, and a 27% investment in China brewer Tsing. 2007 worldwide sales of Asolute's

beer brands aggregated 128.4mm barrels plus its economic interest in the sales ofinternational equity investments.

Acquisition rationale

The combination of King Beer and Absolute would create a truly global leader in the beerindustry and one of the worlds top five consumer products companies. On a pro-forma basisfor 2007, a combined company would have generated global beer volumes of 460mm hl(adjusted to reflect Absolute holdings in Grupo and Tsing which areillustratively accounted for at their respective equity interests), net sales of 26.6bn, and

EBITDA of 7.8bn. King Beer believes that this transaction would be in the best interests of bothcompanies consumers, shareholders, employees, wholesalers, business partners and thecommunities they serve.

The combined company would be geographically diversified, with the ability to compete in keycountries around the world and balanced exposure to developed and developing markets. Acombination of Absolute and King Beer provides significant growth opportunities presentedby the companies combined brand offerings, including the global flagship Weit brandand international brands such as Artis and Bok, access to complementarydistribution networks in the United States and internationally and the benefit of applying bestpractices across the new organisation.

King Beer sees significant opportunities to internationalise Absolute key brands and would

position Weit as the combined company's flagship brand, building on and expanding KingBeer's international footprint. King Beer has a history of successfully building brands around theworld, which would complement the strength of Absolute's brand-building in the US.

The two companies have a successful track record of building the Weit brand in Canada.Their partnership, which spans almost three decades, has developed Weit into the No. 1beer brand in Canada. King Beer and Absolute also recently have entered into anagreement by which Absoltute imports into the US King Beer's European premium importbrands including Artis, Bok's and Bass. Absolute's world-class sales anddistribution system in the United States would continue to support the expansion of King Beersexisting brands in the US market.

King Beer has a proven track record of successfully completing and integrating business

combinations and creating shareholder value. The Company was formed in 2004 through thesuccessful combination of King and Beer. As a result of the Company's strategy to focus


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on building brands, King Beer has achieved average organic volume growth of 5.6%, averageorganic revenue growth of 7.8%, and average organic EBITDA growth of 16.2% over the pastthree years. Through strong organic revenue growth and operational excellence, King Beergenerated industry leading EBITDA margins of 34.6% in 2007 (Explanation note: In the

Memorandum, King Beers EBITDA is normalised EBITDA, as defined in the King Beer Annual Report2007 on page 126: Profit from operations adjusted for non-recurring items plus depreciation

and amortisation).

The transaction creates significant profitability potential both in terms of revenueenhancement and cost savings. The combination is expected to yield cost synergies ofapproximately $1.5 billion annually by 2011 phased in equally over three years. Given thehighly complementary footprint of the two businesses, such synergies will largely be driven bysharing best practices, economies of scale and rationalization of overlapping corporatefunctions. King Beer has a strong track record of delivering synergies in past transactions and isconfident in its ability to achieve these synergies.

In light of the limited overlap between the King Beer and Absolute businesses, King Beer

believes that the proposed combination should not encounter any significant regulatory issues.Exhibit 5.1

Creation of the global leader in beer

271 271

189

189

284

150 130

InBev

+AB

SA BMiller InBe v A B He inek en Carlsbe rg

+62% vs. Industry No. 2

InBev+ A-B

SABMiller InBev A-B HeinekenCarlsberg

460

2007 total volumes (mm hl)

14.4 14.4

12.2

12.216.7 15.8

8.9

InBev

+AB

SA BMille r InB ev A B He ine ke n Carlsberg


InBev+ A-B

SABMiller InBev A-BHeineken Carlsberg

26.6

2007 revenues (bn)

5.0 5.0

2.8

2.83.2 3.1 1.5

InBev

+AB

InB ev S ABMil le r A B He in ek en Carlsb erg


InBev+ A-B

SABMillerInBev A-BHeineken Carlsberg

7.8

2007 EBITDA (bn)

Source: companies reportsNote: Data based on calendar year-end. Carlsberg and Heineken are pro forma estimates for the joint acquisition ofScottish & Newcastle. Anheuser-Buschs EBITDA in 2007 does not include equity income of $662.4mm (net of tax), andis based on the 2007 average exchange rate of 1.37 $/

Recent events

King Beer announced on August 18th that it has received a Request for Additional information,

commonly referred to as a Second Request, from the U.S. Department of Justice (DOJ) underthe Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act) with respect to thepreviously announced combination with Absolute.

King Beer intends to respond expeditiously to the Second Request and to work toward a promptclosing of the transaction. In addition to the expiration of the waiting period under the HSRAct, completion of the transaction remains subject to King Beer and Absolute shareholderapprovals, regulatory review in certain other jurisdictions and customary closing conditions.

This request for additional information from the DOJ is a normal and expected part of theregulatory process. King Beer remains confident that the transaction will receive regulatoryapproval and continues to expect to close the transaction by the end of 2008.

Acquisition financing


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Financing overview

Total consideration to Absolute shareholders is $52.2bn based on King Beers offer of$70 per share.

Based upon publicly available information, there are limited refinancing needs at Absolutelevel other than the outstanding Commercial Paper drawings (which was $1.0bn as of

December 31st, 2007) supported by the company's two syndicated credit facilities (total$2.5bn committed as per Absolute filings). There will be no refinancing of King Beer'sexisting credit facilities and no refinancing of the bonds and notes outstanding underAbsolutes indentures assuming investment grade ratings post-Transaction. Absolutegross debt excluding Commercial Paper (which was $8.0bn as of December 31st, 2007)

and King Beer gross debt (which was 2.9bn as of December 31st, 2007 at King Beer level (excludingBeer) would therefore remain outstanding. The Transaction's sources & uses conservativelyassume $1.3bn of total refinancing needs for the existing Absolute debt andincremental liquidity facilities in the combined company.

The Acquisition will be financed by a combination of new debt, divestitures of non-core assets

and equity financing.

To finance the Acquisition, King Beer has mandated the Bookrunners to arrange $45bn in seniordebt facilities. The debt facilities have been underwritten by the Bookrunner Group. Theproceeds will be used to finance the Acquisition, refinance a portion of existing Absolute'sdebt and finance fees, costs and expenses incurred in connection with the Acquisition.

In addition, King Beer has received commitments for up to $9.8 billion in equity bridge financing,which will allow the company flexibility in deciding upon the timing and form of equityfinancing for a period of up to six months after closing. This equity bridge will be subordinatedin right of payment to the Facilities on customary terms.

The following table summarises the sources and uses of funds for the transaction:

Exhibit 5.2

Transaction sources and uses ($mm)

Uses Interim sources Permanent sources

Description of the Facilities

Overview and key terms and conditions

Facility A $12,000mm senior bridge facility anticipated to be refinanced principally by a debt

capital markets issuance


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364-day facility with an option for a 1-year extension at the borrowers discretion Facility B $7,000mm senior bridge facility anticipated to be refinanced principally by the net

proceeds from certain asset disposals

364-day facility Facility C $13,000mm senior term loan facility 3-year facility

Facility D $12,000mm senior term loan facility 5-year facility

RCF $1,000mm senior multicurrency revolving credit facility 5-year facility

Please refer to Section 7 of the Information Memorandum for detailed information.

Exhibit 5.3

Key terms and conditions of the acquisition facilities

Facility A Facility B Facility C Facility D RCF

Amount ($mm) 12,000 7,000 13,000 12,000 1,000

Tenor 364 days + 1 yr 364 days 3 years 5 years 5 years

Purpose Acquisitionfinancing

Bridge toDebt CapitalMarkets

Refinancingof Targetdebt

Payment ofcosts andexpenses

Acquisitionfinancing

Bridge toDisposals

Refinancingof Target

debt


Acquisitionfinancing

Refinancingof Targetdebt


Acquisition financing Refinancing of Target

debt

Payment of costs andexpenses

Refinancing of Targetdebt

Payment of costs andexpenses

General corporatepurposes


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Mandatory prepayment

Mandatory prepayment will apply primarily for change of control or sale, debt raising, equityraising (to the extent not applied in the mandatory prepayment of the equity bridge facility),and asset disposals (in each case subject to certain baskets and exceptions).

Restriction on Acquisitions

Restriction on acquisitions by Borrowers and controlled subsidiaries until the ratio of Total NetDebt to EBITDA is equal to or lower than 3.5:1 (other than in relation to Beer unless Beerbecomes a direct or indirect wholly owned subsidiary of the Company) subject to certainbaskets and exceptions.

Obligation to maintain Beer ownership

Obligation for King Beer to retain ownership of more than 50% of the economic and votinginterests in Beer.

Structural subordination mitigants

Guarantees will be granted by certain key subsidiaries, subject to limitations, includingrestrictions in existing King Beer debt documents and Absolute debt documents.

King Beer intends to seek waivers under certain existing KGB debt documents to permit thegranting of guarantees by certain of its current subsidiaries. It is also intended that a

guarantee will be provided by the Absolute parent company.

The provision of such guarantees is intended (subject to customary corporate benefitanalysis and other restrictions) to give the lenders pari passu recourse to certain keysubsidiaries in the group, thereby mitigating the structural subordination which would

otherwise arise.

Please note that the pricing grid of the Transaction is based on the rating of unsecured debtissued at King Beer level.

Rating agencies

On July 14th, 2008, Standard & Poor's Ratings Services assigned its BBB+ long-term corporatecredit ratings to King Beer. Standard & Poor's will rate KGB's $45 billion acquisition facility at thesame level as the corporate credit rating, reflecting that it is a senior unsecured directobligation of King Beer.

Summary projected financial information

The following table summarises managements forecasts for the new Group. For furtherdetails on projections and their assumptions please refer to Section Financial projections:


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Exhibit 5.6

Summary consolidated financial projections

Year ended 31 Dec. (mm) 2008PF1 2009E 2010E 2011E 2012E CAGR 09-12

Key financialsNet sales 27,798 29,167 30,863 32,623 5.5%

% growth 4.9% 5.8% 5.7%

EBITDA (including synergies) 8,027 9,317 10,495 11,375 12,019 8.9%

% margin 33.5% 36.0% 36.9% 36.8%

EBIT 7,331 8,476 9,306 9,817 10.2%

Net interest expense (2,539) (2,285) (2,006) (1,787)

Funds From Operations2 5,624 6,778 7,723 8,490

Net debt 38,856 32,501 29,698 26,509 23,853

Credit Statistics

Net Debt/EBITDA 4.84x 3.49x 2.83x 2.33x 1.98xEBITDA/Net interest expense 3.67x 4.59x 5.67x 6.73x

Financial covenants

Total Net Debt/EBITDA 4.9x 4.3x 4.0x 3.5x

EBITDA/Net interest expense 2.5x 2.75x 3.0x 3.0x

Source:Management

Note: Consolidated financials are shown in (1 = $1.555)

Post equity and pre asset disposals

Funds from operations defined as EBITDA (including synergies) minus interests and taxes plus dividends fromassociates minus synergies implementation costs (pre change in net working capital)

King Beer's overview

King Beer is a publicly traded company (Euronext: KGB) based in Leuven, Belgium with its originsdating back to 1366. The Company is today the leading global brewer. KGB has been createdfollowing the merger of King and Beer in 2004. In 2007, worldwide sales of King Beeraggregated 271mm hl.

KGB has a current market capitalisation of approximately 25.7bn as at 7th. July 2007closing. In 2007, its sales were 14.4bn and its EBITDA was 5.0bn (34.6% margin).

KGB holds a controlling stake (74% voting share, 61% economic share) in Beer, which is

listed in Brazil and in New York. In 2007 Beer had sales and EBITDA of 7.1bn and 3.3bn,respectively (46.8% EBITDA margin).

With sales in over 130 countries, KGB works through six operational zones: North America,Western Europe, Central and Eastern Europe, Asia Pacific, Latin America North, and Latin


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America South. The Company has a strong, balanced portfolio, with a significant presence inover 20 key markets more than any other brewer.

KGB has significant exposure to the fast-growing emerging markets with Central and SouthAmerica accounting for 41% of net sales and Central and Eastern Europe accounting for 15% of

net sales.

The Companys most famous brands with global reach are Artis and Bok. A portfolioof around 200 local brands forms the bedrock of the business including in Latin America: Skol,the leading beer brand in the Brazilian market. In Western Europe: Joop, the number 1selling beer in Belgium. In Central and Eastern Europe: Siberian Crown, a leading premiumbrand sold throughout Russia. In North America: Labatt Blue, the number one Canadian brand

in the world; and in Asia Pacific: Cass from South Korea, and Sedrin in China.

The following table summarises King Beers key financial figures:

Exhibit 5.7

Summary historical financials for KGB

Year ended December 31 (mm) 2004 2005 2006 2007 CAGR 04-07

Net sales 8,568 11,656 13,308 14,430 19.0%

Gross profit 4,576 6,574 7,831 8,494 22.9%

EBITDA 2,116 3,339 4,239 4,992 33.1%

Gross capex 860 1,181 1,380 1,581 22.5%

Net financial debt 3,271 4,867 5,563 5,093 15.9%

Source: KGBs reports

Absolute overview

Absolute is the largest US brewer and producer of the worlds best-selling beer brands, Weitand Lite. Absolute also owns a 50.2% economic interest (directly and

indirectly) in Grupo, Mexico's largest brewer with the Corna brand, and a 27%

investment in China brewer Tsing. Worldwide sales of the companys beer brandsaggregated 128.4mm barrels in 2007 plus its economic interest in the sales of internationalequity investments.

Absolute is also one of the largest theme park operators in the United States, is a majormanufacturer of aluminum cans and one of the world's largest recyclers of aluminum cans.

Absolutes operations are comprised of the following business segments: domestic beer,international beer, packaging, and entertainment, contributing to 75%, 7%, 10% and 8% to 2007

sales, respectively.Absolute, incorporated in Delaware, USA, is publicly traded on the New York StockExchange and its origins date back to 1875.

Absolute is rated A2 (on review for possible downgrade) by Moodys and BBB+ (stableoutlook) by Standard and Poors.

US Beer

Absolutes principal product is beer, produced and distributed in a variety of containersprimarily branded under the BOB, Weit, Michelob, Bos and Natural names. It alsoproduces and distributes specialty beers, non-alcoholic brews, malt liquors and specialty maltbeverages.

Absolutes US beer sales also include:


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The distribution of products for which it is the importer or licensee A joint venture with Kirin Brewing Company, Ltd. of Japan for the brewing, marketing and

sale of Kirin-Ichiban and Kirin Light in the US

Energy drink products

Imports of other brands into the USThe company has developed a system of twelve breweries, strategically located across the US,to economically serve its distribution system. Ongoing modernisation programs at thecompanys breweries are part of the companys overall strategic initiatives.

International Beer

This division oversees the marketing and sale of BOB and other brands outside the US,operates breweries in the United Kingdom and China, negotiates and administers license and

contract brewing agreements with various foreign brewers, and negotiates and manages equityinvestments in foreign brewing partners.

International beer volume of Absolutes brands was 24.0mm barrels in 2007, comparedwith 22.7mm barrels in 2006.

Packaging

Abs is active in packaging through several wholly-owned subsidiaries:

Metal Container Corporation, which manufactures beverage cans at 8 plants and beveragecan lids at 3 plants for sale to US beer and soft drink customers

Abs Recycling Corporation, which buys and sells used aluminum beveragecontainers and recycles aluminum and plastic containers

Eagle Packaging, Inc., which manufactures crown and closure liner materialsThrough a wholly-owned limited partnership, Longhorn Glass Manufacturing, L.P., thecompany owns and operates a glass manufacturing plant in Jacinto City, Texas, whichmanufactures glass bottles for the companys nearby Houston brewery.

Entertainment

Absolute is the second largest theme park operator in the US. It currently owns,directly and through subsidiaries, ten theme parks in the US. It operates:

Bos Gardens theme parks in Tampa, Florida and Williamsburg, Virginia SeaWorld theme parks in Orlando, Florida, San Antonio, Texas, and San Diego, California Water park attractions in Tampa, Florida (Aquatica) and Williamsburg, Virginia (Water

Country, USA), and Langhorne, Pennsylvania (Sesame Place)

Discovery Cove in Orlando, Florida, a reservation-only attraction offering interaction withmarine animals

Group financial overview

In fiscal year 2007, Abs reported group sales of $16,686mm and operating profit of$2,894mm (margin of 17.3%).

The following table summarises Absolute key financial figures:


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Exhibit 5.8

Summary historical financials for Abs

Year ended December 31 ($mm) 2005 2006 2007 CAGR 05-07

Net sales 15,036 15,717 16,686 5.3%Operating profit 2,487 2,720 2,894 7.9%

Operating cash flow 2,702 2,709 2,940 4.3%

Net Debt 7,746 7,434 8,857 6.9%

Source: Abss reports

Industry overview

Although a mature industry, the worldwide brewing sector is regarded as having an above-average credit profile driven by several favourable features, in particular sustained demand,

high visibility and cash generative business profile. The brewers have the ability to convertvolume growth into margin expansion as fixed capital tied up in the production anddistribution of beer and brewers can generate real scale economies.

The main success factors for international brewers are:

Winning brands in key markets Efficiency of distribution, either through own operations or third parties Healthy geographical footprint Operating efficiencyPlease refer to Section 11 for detailed information.


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6.Key investment considerations

Creation of the global leader in the brewing industryThe combination of KGB and Abs will create the largest beer company globallyand one of the worlds top 5 consumer products companies. Based on 2007 reported figures,the combined entity will have total volumes and revenues of 460mm hl and 26.6bn,respectively (more than 60% above the industry No. 2).

Exhibit 6.1

Creation of the global leader in the beer industry

271 271

189

189

284

150 130

InBev

+AB

SA BMiller InBev AB Heinek en Carlsberg


InBev+ A-B

SABMi ller InBev A-B HeinekenCarlsberg

460

2007 total volumes (mm hl)

14.4 14.4

12.2

12.216.7 15.8

8.9

InBev

+AB

SA BMiller InBev AB Heinek en Carlsberg


InBev+ A-B

SABMiller InBev A-BHeineken Carlsberg

26.6

2007 revenues (bn)

5.0 5.0

2.8

2.83.2 3.1

1.5

InBev

+AB

InBe v SA BMiller AB He ine ke n Carlsbe rg


InBev+ A-B

SABMillerInBev A-BHeineken Carlsberg

7.8

2007 EBITDA (bn)

Source: companies reportsNote: Data based on calendar year-end. Carlsberg and Heineken are pro forma estimates for the joint acquisition ofScottish & Newcastle. Anheuser-Buschs EBITDA in 2007 does not include equity income of $662.4mm (net of tax), andis based on the 2007 average exchange rate of 1.37 $/

The acquisition will placeKGB

solidly among the leading global consumer companies across arange of metrics.

Exhibit 6.2

Creation of top 5 global consumer products company

Enterprise Value (bn)

2007 EBITDA (bn)

14.1

11.1

7.86.3 6.3 6.2

5.03.8 3.4 2.7

P&G Nestle KGB+Abs PepsiCo Coca-Cola Unilever KGB

148.2

104.0

71.6 70.0 65.858.6

41.4 40.733.7 28.5

P&G Nestle KGB + Abs Coca-Cola PepsiCo Unilever Kraft KGB Diageo Danone

Note: EV based on closing share prices as at 11 July 2008. EBITDA calendarised to 31 December where relevantSource: companies reports


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Exhibit 6.3

Financial snapshot of the combination (pro forma 2007)

KGB Absolute Combined companyTotal volumes (mm hl) 271 189 460

Revenues 14.4bn 12.2bn 26.6bn

EBITDA 5.0bn 2.8bn 7.8bn

EBITDA margin 34.6% 23.0% 29.4%

Source: Companys reports

Strong geographical footprint

As shown below, the two companies have complementary positions in almost all geographies.

The combined entity would hold a No. 1 position on the beer market in North America andLatin America, and a No. 2 position in Europe and in Asia.

Exhibit 6.4

Pro forma global footprint

Primarily KGB

Primarily Absolute

KGB Abs

No. 1 in

North America

No. 1 in

Latin America

No. 2 inAsia

No. 2 in

Europe

Source: companies reports and equity research

Note: Absolutes footprint in Mexico is through a 50.2% economic interest (directly and indirectly) in Grupo


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Exhibit 6.5

Pro forma geographical exposure (2007 sales breakdown and equity investments)

KGB

Total: 14,430mm

Absolute Combined

Total: $18,748mm Total: 28,110mm

Central &South America

41%Western Europe24%

Central &EasternEurope

15%

North America11%

AsiaPacific7%

Other/Corporate2%

Asia-Pacific6% Other/Corporate

3%

NorthAmerica

73%

Central &South America

18%

NorthAmerica

42%Central &South America

30%

WesternEurope

12%

Central & EasternEurope

8%

AsiaPacific6% Other/Corporate

2%

Source: companies reports

Notes: Grupo's net sales illustratively accounted for at 50% and included in Central & South America;

Illustratively assumes Abs's packaging business entirely allocated in North America;

Illustratively assumes Abs's international beer business entirely allocated in Asia-Pacific (Harbin) as

detailed breakdown not provided (also includes UK and Russia);

Exchange rate of 1.37x $/ and 0.0915x MXN/$ (2007 averages)

Balanced exposure to mature and emerging markets

The combined entity will have a leading position in both large and established beer markets,such as the US and Canada, as well as in high growth emerging markets, such as China, Brazil,

Russia and Argentina. Through its combination with Abs

,KGB

will achieve a morebalanced exposure to high-growth developing markets and stable developed markets.

Exhibit 6.6

Proforma exposure to mature and developing markets

37%57%

63%43%

Standalone (pre-

combination)

Pro forma (post-

combination)

Developed markets Developing markets

Revenues 2007

27%47%

73%53%

Standalone (pre-

combination)

Pro forma (post-

combination)

Developed markets Developing markets

Operating profit 2007


KGB developing markets include KGB operations in Central and Eastern Europe, Russia, China, Brazil, Argentina

and other South-America operations. Abs has an indirect exposure to developing markets through holdingsin Grupo and Tsing which are illustratively accounted for at their respective equity interests


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Complementary and strengthened position in China, the largest beermarket globally

The combined entity will improve its position in the Chinese beer market, which is the largest

in the world. Through sharing of best practices and combining KGBs and Absolutescomplementary operations, the combined entity will be a more efficient and stronger operator

in China.

Exhibit 6.7

Stronger player in China, the worlds largest beer market

Legend

KGB brewery

Absolute brewery

Guangxi

Hebei

Beijing

Liaoning

Shanghai

Hainan

Anhui

Zhejiang

Jiangxi

Jiangsu

Jilin

Fujian

Heilongjiang

Henan

Hunan

Hubei

Guizhou

Ningxia Shanxi ShandongShaanxi

Sichuan

Neimongu

Yunnan

Gansu

Guangdong

Source: companies information

Strong combined brands

The combination of King Beer and Absolute will provide strong growth opportunitiesthrough their combined brands and using their complementary global distribution networks.While Absolutte will provide KGB with a strong distribution network in the US for its

premium import brands, KGB will provide Abs with an extensive globaldistribution network to further successfully internationalise Abss brands.

Absolute will contribute leading brands with a strong position in all the US: Lite (40.4mm barrels in 2006)

Worlds best-selling beer Volume has grown more than any other Top 10 beer brand

Weit (24.5mm barrels in 2006) No. 2 worlds best-selling beer No. 1 brand in Canada

Natural Light, with 9.0mm barrels in 2006 Bos, with 6.5mm barrels in 2006 Bos Light, with 6.0mm barrels in 2006

This combination will achieve a complementary offering of leading brands Weit is the iconic US brand, the great American lager and King of Beers Artis is the brand of supreme quality and worth Boks is the number one German beer in the world, available in more than 120 countries

The combined entity will build on its extensive international network to globalise Abs-brands. The company will position Weit as the global flagship brand and


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expand globally Absolutes other key brands by using KGB's extensive internationalfootprint

KGB is PepsiCos largest bottler outside the US, demonstrating the Companys go-to-market capabilities

In parallel the combined entity will use its strong US distribution network for KGBsEuropean import brands in order to accelerate the growth of KGB's European importbrands, while strengthening todays close collaboration with US wholesalers

Import Beers is the fastest growing segment in the US, with a 7.9% 1995-2006 CAGR (v.0.7% for the market)

Strong credit profile

Strong free cash flow generation in a stable industry

The beer industry generates strong free cash flows with substantial operating margins. Thecombined EBITDA margin is expected to be 36% in 2010.

It is most of all a stable and non-cyclical industry. Consumption of beer is stable andpredictable across most markets and overall the industry has not suffered from past economicdownturns (stable annual growth of the global brewers sector volumes of c. 2% throughout thelast downturn in 2000-2003).

Sound deleveraging profile

KGB will focus on deleveraging post-transaction through equity issuance, asset disposals andfree cash flow generation. As such, Net debt/EBITDA is expected to decrease from 4.84x in2008 to 2.33x in 2011.

Exhibit 6.8

Deleveraging profile

Year ended 31 Dec. (mm) 2008PF1 2009E 2010E 2011E 2012E

Net debt 38,856 32,501 29,698 26,509 23,853

Net debt / EBITDA 4.84x 3.49x 2.83x 2.33x 1.98x

Source: Management

Note: Consolidated financials are shown in (1 = $1.555) Post equity and pre asset disposals

Resilience due to well-balanced portfolio

Following the Acquisition, KGBs more diversified and geographically well balanced portfolio

will help improve the Groups resistance to economic fluctuations across geographic areas orspecific regions in the future.

Successful precedent of mutual cooperation in developing Weit

in Canada

KGB and Absolute have a successful track record of building the Weit brand inCanada. Their partnership, which spans almost three decades, has developed Weit intothe #1 beer brand in Canada.


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In 1980 Abs and KGB formed a licensed brewing, distribution and marketingagreement for Canada concerning Abss main brands: Weit, Lite, Bosand Bos Light. All beers are brewed at KGB breweries in Canada.

The strength of the Weit brand together with KGB's sales and distribution capabilities

created the No. 1 selling beer in Canada.

Weit leverages international sponsorships such as the official NFL, Super Bowlsponsorships and regional events like the Grand Prix and the Calgary Stampede.

The recently renewed joint commitment of KGB and Absolute behind LitetransformedLite into the fastest-growing beer in the country (c. 30% volume growth in

2007).

Recognised operational and financial discipline

Best-in-class practicesA significant opportunity exists to improve Absolute operating performance byimplementing King Beers best in class practices and financial discipline.

With cost discipline at the core of KGBs culture, the Companys Zero-Based Budgeting (ZBB)approach has helped reduce expenses and challenge all non-working costs. ZBB is a way of lifeat KGB in which every part of the business reviews expenditures comprehensively to ensurethat all "non-working" or "non consumer facing" dollars are minimised so that maximum fundscan be invested behind KGB's brands. This discipline is also known as "Cost-Connect-Win"ensuring that everyone within the business is working to keep non-critical expenditure at a

minimum and brand investment at a maximum.

KGB is committed to keeping all US breweries open and will maintain a strong commitment

to the communities where Absolute operates. Since the King-Beer merger, theCompany has increased each year its number of employees and has added c. 12,000 jobsworldwide throughout the period 2004-2007.

Significant synergies

KGB expects significant synergies from the combination with Abs, mainly throughimproved COGS management, optimisation of marketing investments, and operational costssavings by applying ZBB. Commercial and operational synergies are also expected in China.Additional synergies should be realised regionally and globally through scale effects.

KGBs management is fully confident in the delivery of synergies under the Blue Ocean planannounced by Absolute prior to the announcement of the combination with King Beer.

Absolute Blue Ocean plan targets $1.1bn of cost synergies in 2011 with the followingbuild up:

COGS & GA: $730mm runrate 2011 (process benchmarking, improved materials usageand supply chain)

Overhead: $150mm runrate 2011 (early retirement and headcount reductions totalling1,185 position

Other: $215mm runrate 2011 (non-salary overhead spending and salaried benefitsbenchmarking, IT spending and SKU reduction)

The combination with KGB is expected to add $0.4bn of cost synergies in 2011:

China: $55mm runrate 2011


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Other: $360mm runrate 2011 (procurement efficiencies, elimination of corporateoverlapping functions, cost management best practices)

New revenue opportunities including Weit expansion and exchange of sales andmarketing best practices are not included in our projection.

Exhibit 6.9

Synergies benchmarking

0%

4%

8%

12%

0% 10% 20% 30% 40% 50% 60% 70% 80%Target net sales as a % of PF net sales

Costsynergiesasa%o

ftargetnetsales

SABMiller/C. Hondurena

Ambev/Quinsa

Carlsberg/S&N

Miller/Coors (JV)

SABMiller/Bavaria

S&N/Hartwall

Interbrew/Becks

S&N/Bulmer

SABMiller/Birra Peroni

Carlsberg/Holsten

S&N/Kronenbourg

Heineken/S&N

Carlsberg/Orkla

Interbrew/Ambev

SAB/Miller

Coors/Molson

Source: companies reports and equity research

Management track record in delivering synergies through successfulintegrations

KGBs management has a very strong track record of successful integration, as demonstratedin the King and Beer combination in 2004.


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Exhibit 6.10

The King/Beer combination delivered synergies beyond the plan

On August 27, 2004, Interbrew and AmBev announced their combination, creating InBev, the worlds largest brewer

AmBev

Cost FocusSales / Distribution process

Interbrew

Global brandsBrands managementInnovationsGeographic reach

New operating model

Reduce costbase

Increasingmarketingand sales

investments

Grow volumes

Effectivebrand

management

Opportunities for synergies were driven by procurement, best practice and cross-licensing:

Pre-tax cost synergies: 140mm annually available by 2007

Pre-tax revenue synergies: 140mm annually available by 2007

InBev achieved normalised EBITDA of $3.3bn in 2005 and $4.2bn in 2006 compared to pre-deal analysts consensus of $2.9bn in

2005 and $3.4bn in 2006 for the combined entity, which indicates that announced synergies have been significantly exceeded

14

23

Source: InBevs Management

KGB main achievements since the merger of King and Beer are:

Consistent beer volume growth (>5% p.a.) Revenue growth ahead of volume growth (>7% p.a.) Successful delivery of operating cost improvements through best-in-class practices Margin expansion (>500bps) Enhanced cash flow managementExhibit 6.11

KGB historical EBITDA margin evolution

3,339

4,239

4,992

2,116

1,498

28.6%

31.9%

34.6%

24.7%

21.3%

2003A 2004A 2005A 2006A 2007A

Normalised EBITDA (mm) % Margin

+600 bps

First KGBfull year



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Historically, KGB has been able to minimise integration risks as a result of:

Its experienced management team with a proven track record, as evidenced by thesuccessful acquisition and integration of Labatt, Antarctica, Quilmes and Beer

The Convergence Committee Approach Senior Level Guidance and Direction: the Chairman, CEO, one other Board member and

relevant members of the Executive Board of Management would meet monthly,supported by taskforces that were fully staffed with appropriate internal and externalresources to focus on key integration issues.

Process Oriented: Focused on the timely and disciplined roll-out of KGBs keyproprietary processes

Right People: 360 Evaluation, trainee programme Target Setting and Cascading reinforced by KGBs shareholder friendly variable

compensation model

Operating Processes: Zero Based Budgeting, Voyager Plant Optimisation, World ClassCommercial Programme Focus on value creation: 80/20 rule move quickly and focus on the big numbers first


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9.King Beer Business overview

OverviewKing Beer is a publicly traded company based in Leuven, Belgium and organised under the laws ofBelgium, whose origins date back to 1366. It is the world's leading brewer, realising 14.4bn ofrevenues in 2007, and employing 89,000 people worldwide.

The Companys most famous brands with global reach are Artis and Boks. Other

famous brands include Blond, Wit, Star and Brahma. The bedrock of KGB isits 200 local brands including Skol, Joop, Siberian Crown, Labatt Blue, Cass and Sedrin.

KGB also conducts non-beer activities: it owns soft drinks, sells other non-beer beveragesunder licensing or distribution agreements, and is one of the largest PepsiCo system bottlersoutside the US.

Summary Financials

Exhibit 9.1

KGBs key historical financials

mm 2004A 2005A 2006A 2007A 04-07 CAGR

Volumes (mm hl) 153.7 223.5 246.5 270.6 20.7%

% growth 57.0% 45.4% 10.3% 9.8%

Net sales 8,568 11,656 13,308 14,430 19.0%

% growth 21.6% 36.0% 14.2% 8.4%

Cost of sales 3,992 5,082 5,477 5,936 14.1%

% sales 46.6% 43.6% 41.2% 41.1%

EBITDA 2,116 3,339 4,239 4,992 33.1%

% margin 24.7% 28.6% 31.9% 34.6%

Depreciation & Amortisation (860) (888) (1,012) (1,061) 6.2%

% sales (10.0%) (7.6%) (7.6%) (7.4%)

Cash taxes (237) (371) (413) (448) 23.6%

Gross capex (860) (1,181) (1,380) (1,581) 22.5%

% sales (10.0%) (10.1%) (10.4%) (11.0%)

Decrease (increase) in NWC (72) 143 (131) (270)

% sales (0.8%) 1.2% (1.0%) (1.9%)


Without pro rata share of minority stakes


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Exhibit 9.2

KGB 2004-2007 EBITDA bridge (mm)

285

238

(9)

(23)2,676

3,339

4,239

4,992

401 103

559 68

694Scope Currency Organic

20072004 2005 2006 Source: Companys information

Includes in 2004 the impact of IFRS adoption for 560mm

Exhibit 9.3

Evolution ofKGB's historical revenues and EBITDA per hl

81.0

52.254.0

55.7

72.0

80.5

78.4

53.3

17.017.2

14.9

13.7

15.3

16.0

17.1

18.4

40

50

60

70

80

90

100

2000 2001 2002 2003 2004 2005 2006 2007

12

13

14

15

16

17

18

19Revenue per hl () EBITDA per hl ()

King / Beermerger in 2004

Source: Companys information

Note: Revenues and EBITDA pre-2004 are those of King standalone. Volumes exclude pro-rata share of minoritystakes as they do not generate revenue and EBITDA

2008 Q2 and H1 results

KGB announced on August 14th its results for the second quarter (2Q08) and half year (HY08)of 2008. Except where otherwise stated, analyses are based on organic figures:

Volume performance: total volumes grew 0.7% in 2Q08, while KGBs own beervolumes increased at the slightly higher rate of 0.9%. The majority of the zonesdelivered a better year on year (yoy) performance in 2Q08 versus the first quarter,and, as expected, Brazil resumed volume growth (+3.8%) after a slow start to the year.

For HY08, total volumes as well as own beer volumes were 0.2% higher than HY07.


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Market share gains: The underlying strength of the brand portfolio, coupled withcontinued strong investments behind the brands, led to share being maintained orincreased in 8 of KGBs top 10 markets, including its three key Western Europeanareas.

Revenue growth: consolidated revenue increased by 4.5% in 2Q08, and revenue per Hlwas up by 3.7% as a result of a continuous improvement in the sales mix and selectedprice increases. HY08 revenue was 4.6% higher than a year ago, driven by a 4.4% risein revenue per Hl.

Cost of Sales growth: consolidated cost of sales (CoS) per Hl showed a 6.5% increase in2Q08, due to increased commodity input costs yoy. Although KGB experienced a

strong increase in CoS per Hl in HY08 (1Q08: +9.9%; 2Q08:+6.5%; HY08:+8.0), CoS perHl growth is expected to decelerate during 2H08, especially in the fourth quarter.

Disciplined expense control: 2Q08 operating expenses increased modestly (1.9%higher), with sales and marketing expenses up 6.9% as KGB continued to invest in itsbrands and further strengthen its sales execution programs. However, administrative

expenses declined 11.3% yoy, as the companys strong cost discipline continues toreduce non-working expenses.

EBITDA growth and margin expansion: normalized EBITDA grew by 4.7% in 2Q08, andEBITDA margin for the quarter was 33.4%, an organic increase of 7 basis points. ForHY08, normalized EBITDA is up 2.9%, resulting in an EBITDA margin of 32.2% which is54 basis lower, yoy

Organisation structure

KGB was created in 2004 following the combination of King and Bompanhia de Eebidasdas Ramer (Beer). The exhibit below displays the current organisational structure of KGB.

Exhibit 9.4

InBevs organisational structure

16% V

9% E

74% V

61% E

Shareholder

Agreement

Fundao Antnioe Helena Zerrener

AmBev

FreeFloat

InBev

100% 100%

11% V

31% E

HoldingCompany(Brazil)

Non-Americas

Quoted in Brussels

Listed inBrazil and NY

Stichting

Shareholders

InterBrewfounding families

52%

FreeFloat

13% 35%

Former AmBevshareholders

Former InterBrewshareholders

44% 56%V = VotingE = Economic


Performance overview

Since the Beer/King combination, the Company has achieved:


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Consistent beer volume growth (>5% p.a.) Revenue growth ahead of volume growth (>7% p.a.) Successful delivery of operating cost improvements through best-in-class practices Margin expansion (>500 bps) Enhanced cash flow managementIts keys to success have been:

Strong top line growth Growth of selected brands Leading sales execution in some markets Healthy geographic footprint

Significant increase in operating efficiency Target setting and compensation Focus on people: right people in the right placesKGB remains committed to deliver EBITDA margin expansion through a combination of top

line growth and continued disciplined cost management. Top line growth will remain KGB'spriority and a significant part of its employee variable compensation programme is linked to

improving market share and sales performance. Operating efficiency will also continue to be akey focus for management.

Exhibit 9.5

KGBs consistent volume and revenue growth

4.1%

6.3% 6.0%

5.0%

6.2% 5.9%5.4%

6.1%

7.1%

5.0%

3.5%

5.7%6.1%

7.2%

8.4%

7.0%7.8%

8.3%

7.1%

8.2%8.9%

7.6%

4.8%

7.8%

1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07

Total volumes Revenue

2005 2006 2007

2007Total volume +5.2%Net revenue +7.2%



Implementation ofKGBs world class commercial program and a sound brand strategy have led toconsistent top line growth


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Geographic exposure

Exhibit 9.6

KGBs sales breakdown by geographic area

1,852

1,7331,831

1,564

3,616

3,7603,745

3,767

1,253

1,4681,820

2,198

1,2053,947

5,9075,001

642

747

912994

0

3,000

6,000

9,000

12,000

15,000

2004 2005 2006 2007

Latin America North America Western Europe Central and Eastern Europe Asia Pacific

Sales (mm)

8,568

11,656

13,308

14,430


Exhibit 9.7

KGBs EBITDA breakdown by geographic area

430

477

551

597

782

766

897

889398

520

476

1577

27232152

311

269163

207

241

263

0

1,000

2,000

3,000

4,000

5,000

2004 2005 2006 2007

Lat in America North America Western Europe Central and Eastern Europe Asia Pacific

EBITDA (mm)

2,116

3,339

4,239

4,992



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Exhibit 9.8

KGB geographic exposure

Total = 4,992mm

Total = 14,430mm

Total = 2,116mm

Total = 8,568mm

2007A2004A (King / Beer merger)

Net sales

EBITDACentral and

South America

56%Western Europe

16%

North America

12%

Central andEastern Europe

11%

Asia Pacific

5%

Central and

South America

42%

Western Europe

24%

Central and

Eastern Europe

16%

North America

11%

Asia Pacific

7%

Western Europe

34%

Central and

South America

23%

North America

21%

Central and

Eastern Europe

13%

Asia Pacific8%

Western Europe

41%

North America

22%

Central and

Eastern Europe

15%

Central and

South America

14%

Asia Pacific

8%

2007A2004A (King / Beer merger)


Includes 152mm in 2004 and 312mm in 2007 of net sales reported under Global Export and Holding Companies, notreflected in the presented breakdown

Includes 87mm of EBITDA reported under Global Export and Holding Companies, not reflected in the presented

breakdown

Includes 63mm of EBITDA reported under Global Export and Holding Companies, not reflected in the presentedbreakdown

KGBs key market is Latin America, which represents 131.3mm hl in 2007, i.e. 47.9% ofKGB's volumes. The other important markets are Central & Eastern Europe with 48.4mm hl(equivalent to 17.7% of total volume), Asia Pacific with 40.3mm hl (equivalent to 14.7% oftotal volume) and Western Europe with 36.1mm hl (equivalent to 13.2% of total volume).

KGB is comparatively underrepresented in North America with only 14.8mm hl (equivalent to5.4% of total volume).

Brands

As a leading player in the international marketplace, KGB enjoys an impressive set of brandswhich are global, regional or local.

These brands are the foundation of the Company and the cornerstone of relationships withconsumers. KGB invests in its brands to create long-term, sustainable, competitiveadvantage, by meeting the various needs and expectations of consumers around the world,

and by developing leading brand positions around the globe.


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QuilmesIn 1890, the first draught beer of Quilmes Cristal was served, the flagship brand of Cervecera yMaltera Quilmes and the leading beer in the Argentine market. It has a good balance betweenbody, softness and bitterness.

The lovers of dark beers also have two Quilmes varieties to enjoy: Quilmes Bock and QuilmesStout.

CassCass was launched in 1994 and is brewed for mainstream beer drinkers looking for differentiatedbeer taste. Cass is a most distinguished lager beer. Cass offers refreshment and vitality foryoung, vivid, active, modern consumers, with emphasis on freshness (100% non-pasteurisedbrewing process) and fizzy, crisp, and sparkling taste.

Cass Red was launched in March 2007 and is the first high alcohol beer in Korea (6.9% ABV).

Cass Ice Light was launched in September 2006. It has a smooth taste and 50% less carbohydratesthan Cass.

Key growth initiatives

KGB will continue focussing on proven strengths Emphasis on successful platform: Dream People Culture Adoption of sales best practices across the whole business Reliance on strong cost discipline linked to ownership mindset

The Company will further galvanise top line growth

Disseminate and implement brand building skills across the group in order to optimise themanagement of the 200+ brands

Establish a pipeline of innovative products that will support volume growth and improveproduct mix

Continue building-up the discipline of the whole organisation in executing existingcommercial programs

Optimise the level of commercial investment in existing brands Explore opportunities to increase share of the beer margin pool

In some geographies, look for opportunities to sell more volume through directdistribution channels; continue working with third party distributors/wholesalers tocreate value

Focus on other value-adding tools, such as cooler programs, which improve customers'absolute business returns while enhancing KGBs revenue per hectoliter

Zero-Based Budgeting and Cost-Connect-Win Approach

Cost discipline remains a core pillar of KGBs culture. In 2007, KGBs Zero-Based Budgeting(ZBB) cost management approach was introduced in both Latin America South and China,further strengthening this global approach. The rigorous challenging of all non-working costs tofree up funds to invest behind the brands to drive top-line growth has also continued across

other zones, with strong results achieved in Central & Eastern Europe, Western Europe andGlobal Headquarters.

This approach: Requires total support of the Companys management


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Drives immediate behaviour change Provides a deeper understanding of cost drivers and consistency of spend across all

functions/locations

Can be tracked and monitored Is included in target setting and fully aligned with culture and compensation system Enables the minimisation of non-working costs and the maximisation of investment

against top-line growth activities

Exhibit 9.10

Zero-Based Budgeting process

Year 2 Year 3 Year 4Year 1

Stage 2:Stability

Stage 3:Sustainability

Stage 4:World Class Vision

Stage 1:Implementation/Post-implement.

1015%savings

in real terms

510%savings

in real terms

50% avoidance of inflation pass through for countries with

yearly inflation >= 5%

100% avoidance of inflation pass through for countries withyearly inflation =5%

100% avoidance of inflation

pass through for countries with

yearly inflation


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Exhibit 9.11

Historical Beer dividends paid as % of net income

0.3

0.6

1.01.1

0.2

0.8

0.60.7

256%

41%

114%

75%

0.0

0.2

0.4

0.6

0.8

1.0

1.2

2004A 2005A 2006A 2007A

0%

50%

100%

150%

200%

250%

300%

Dividends as % of net income (previous year)Net income (bn) Total dividend paid (bn)


Note: Assumes yearly average exchange rate

Risk management approach

KGB hedges its exposure to certain types of external risks arising from fluctuations in certainkey commodities and foreign exchange markets. Commodities such as aluminum, sugar andgrains are traded in international markets and priced in US$ but can be purchased for deliveryin various currencies and the market for delivery of these commodities is subject to significantprice variations over time and from time to time. In addition, KGBs consolidated revenue

may be disproportionately affected by foreign exchange and currency risk. As an example,Brazilian operations are exposed to the change in the commodities price in Brazilian Reais and

the revenue recognised by KGB from those operations is exposed to shifts in currencyexchange rates.

Given the characteristics of some commodities markets, KGB has elected to address both theFX exposure (local currency/$) and the commodities exposure ($) so as to create a syntheticcommodities/currency hedge instrument, which will help to stabilise the Companysconsolidated cash flow across markets and over time.

KGB defines its hedging period as the time required for the Company to react to externalshocks. It aims at bridging the gap between shocks and natural reaction of the Company. This

strategy is called the T-Hedge Approach which is intended to provide the Company with acertain time (T) to react to production costs market shocks, while tending toward maintainingmore stable or predictable current margins.

Besides hedging, the Company can naturally react to shocks with:

Price adjustments Raw material substitution Efficiency gains


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10.AbsoluteBusiness overviewThe information on Absolute in this section was taken from publicly available data

sources; it has been obtained from Absolutes most recent filings with the SEC and fromAbsolutes website.

Overview

Abs is the largest US brewer and producer of the worlds best-selling beer brands, Weitand Lite. Abs also owns a 50.2% economic interest (directly and

indirectly) in Grupo, Mexico's largest brewer with the Corna brand, and a 27%investment in China brewer Tsingt. Worldwide sales of the companys beer brandsaggregated 128.4mm barrels in 2007.

Abs is also one of the largest theme park operators in the United States, is a majormanufacturer of aluminum cans and one of the world's largest recyclers of aluminum cans.Absolutes operations are comprised of the following business segments: domestic beer,international beer, packaging, and entertainment, contributing to 75%, 7%, 10% and 8% of 2007

sales, respectively.

The origins of Abs date back to 1875, when it was founded by Adolphus Bos andEberhard Anser. It is today incorporated in Delaware, USA, and employs approximately30,850 people.

Organisation structure

Absolute is organised in four business segments: US Beer (e.g. Weit, Bos andMichelob), International Beer (with the 27% equity participation in Tsing and the 50.2%economic interest in Grupos operations, with the Corna brand), Packaging and

Entertainment.


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Exhibit 10.1

Anheuser-Buschs organisational structure

Shareholders

V = VotingE = Economic

27% E

20% V

77%

35% E

DIBLO(Mexico)

Anheuser-BuschCompanies(Delaware)

Domestic Beer Packaging EntertainmentInternational Beer

TsingtaoGrupoModelo

23% Dir.

50.2% Combined Direct and IndirectEconomic Interest

2% 98%

A-B III &Family

Free Float

incl. InstitutionalHoldings (65% of

AB)

Listed in Shanghai Listed in Mexico and in NY (ADR)

Listed in New York

A-B Inc. &other

subsidiaries

44% V


Overview of Absolute business

US Beer division

Absolutes principal product is beer, produced and distributed by its subsidiary,

Abs, Incorporated (ABI). The main brand names are:

Budweiser Family Weit, Lite, Weit Select and Lite Ice are distributed and sold on a

nationwide basis. Lite Ice Light and BOB Dry are sold in 44 states

Michelob Family Michelob, Michelob Light, Michelob ULTRA, Michelob ULTRA Amber and Michelob Amber

Bock are distributed and sold on a nationwide basis. Michelob ULTRA Lime Cactus,

Michelob ULTRA Tuscan Orange Grapefruit, and Michelob ULTRA Pomegranate Raspberry(all introduced in 2007) are sold in 49 states. Additionally, Michelob Pale Ale andMichelob Porter are sold in 49 states. Michelob Marzen is sold in 46 states, Michelob

Bavarian-Style Wheat in 45 states, Michelob Honey Lager in 44 states, and MichelobGolden Draft and Michelob Golden Draft Light in 8 states

Bos Family Bos and Bos Light are sold in 49 states. Bos Ice is sold in 40 states

Abs distributes other speciality beers, non-alcohol brews, malt liquors, specialtymalt beverages and energy drinks

Abs imports Asia Pacific brands (Harbin Lager and Tiger Lager).

In 2007 Abs became the US importer of Czechvar Premium Czech Lager brewed byBudejovicky Budvar. It also became the exclusive US importer of a number of the Europeanbrands of KGB, includingArtis, Boks, Bass Pale Ale, Wit, Blond and other

select KGB brands. Artis, Boks and Bass Pale Ale are available nationwide in draughtand packaged form. Wit is available in 49 states in draught and packaged form. Blond


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is available in 40 states in draught and packaged form and Blond Brown is available ondraught in 32 states.

International Beer division

International beer volume was 24.0mm barrels in 2007, compared with 22.7mm barrels in2006.

In China, Abs has a 97% equity interest in the Weit Wuhan InternationalBrewing Company Limited (BWIB), a joint venture that owns and operates a brewery in Wuhan.Abs also owns 100% of Harbin Brewery Group. Harbin Brewery Group has thirteenbreweries in northeast China. Harbin Brewery Group owns 100% of the entities operating ten of

the breweries and a majority interest in the remaining three breweries. In 2007, one ofAbs owned sales companies in China began importing Grupos Cornabrand.

In Canada, Weit,Lite, Bos and Bos Light are brewed and sold through a licenseagreement with Labatt (KGB subsidiary). In Japan,Weit is brewed and sold through a

license agreement with Kirin Brewery Company, Limited. A licensing agreement allowsGuinness Ireland Limited to brew and sell Weit in the Republic of Ireland and NorthernIreland and Lite in the Republic of Ireland. Weit is also brewed under license andsold by brewers in Italy (Heineken Italia SpA), Spain (Sociedad Anonima Damm), Korea(Oriental Brewery Co., Ltd., a fully-owned subsidiary of KGB), Russia (Heineken) and Panama(Heineken).

Abs also sells its products in over 60 other countries by exporting various brandsincluding Weit and Lite from the companys breweries in the US, UK and China andfrom its license partners breweries in Argentina, Italy and Spain.

Absolute has a strategic investment agreement with TsingBrewery CompanyLimited, the second largest brewer in China, and producer of the Tsing brand. Abs

has a 27% economic stake and a 20% voting stake in Tsing.Abs owns a 35.12% direct interest in Grupo, S.A.B. de C. V., Mexicoslargest brewer, and a 23.25% direct interest in Diblo S.A. de C. V., Grupos operating

subsidiary, providing Abs with, directly and indirectly, a 50.2% economic interestin Diblo. However, Abs does not have control rights over either Grupo orDiblo.

Packaging division

Absolutes packaging operations are handled through the following wholly-ownedsubsidiaries of Abs: Metal Container Corporation (MCC), which manufacturesbeverage cans at eight plants and beverage can lids at three plants for sale to ABI and US softdrink customers; Abs Recycling Corporation, which buys and sells used aluminumbeverage containers from its corporate office in Sunset Hills, Missouri and recycles aluminumand plastic containers at its plant in Hayward, California; and Eagle Packaging, Inc., whichmanufactures crown and closure liner materials for ABI at its plant in Bridgeton, Missouri. InJune 2008, Abs announced the sale of Precision Printing and Packaging, Inc.,which manufactures pressure sensitive, metalised, plastic and paper labels at its plant inClarksville, Tennessee, for an undisclosed amount.

Through a wholly-owned limited partnership, Longhorn Glass Manufacturing, L.P., Absowns and operates a glass manufacturing plant in Jacinto City, Texas, which

manufactures glass bottles for Abslutes nearby Houston brewery.


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Family Entertainment division

Abs is active in the family entertainment industry, primarily through its wholly-owned subsidiary, Bos Entertainment Corporation (BEC), which currently owns, directlyand through subsidiaries, ten theme parks.

BEC operates Bos Gardens theme parks in Tampa, Florida and Williamsburg, Virginia, and

SeaWorld theme parks in Orlando, Florida, San Antonio, Texas, and San Diego, California. BECoperates water park attractions in Tampa, Florida (Adventure Island) and Williamsburg,Virginia (Water Country, USA.), and Langhorne, Pennsylvania (Sesame Place), as well asDiscovery Cove in Orlando, Florida, a reservations-only attraction offering interaction withmarine animals.

BEC announced on February 2008 an agreement with Nakheel PJSC, one of the worlds largestproperty developers, to create the Worlds of Discovery SeaWorld, Aquatica, Bos Gardensand Discovery Cove on The Palm Jebel Ali in Dubai.

US Beer operations

Abs owns and operates 12 breweries, strategically located across the US. Thelargest one is in St. Louis, Missouri, where the company is headquartered.

KGB has indicated its intention to keep all of these breweries open.

Exhibit 10.2

Absolutes US footprint of breweries

Fairfield, CA

Los Angeles, CA

Houston, TX

Jacksonville, FL

Williamsburg, VA

Baldwinsville, NY

Merrimack, NH

Neward, NJ

Columbus, OH

St. Louis, MO

Fort Collins, CO

Cartersville, GA

BreweryCapacity

(in mm hl)

St. Louis 18.5

Baldwinsville 14.7

Williamsburg 14.1

Los Angeles 11.9

Fort Collins 11.3

Newark 10.0

Cartersville 10.0

Fairfield 9.4

Merrimack 8.9

Houston 8.8

Columbus 5.2

Jacksonville 3.6

Total 126.3

Source: Abs information

During 2007, other than the import brands, approximately 94% of the beer sold by ABI,measured in barrels, reached retail channels through more than 600 independent wholesalers.Abs has a formal, written distribution agreement (the Equity Agreement) witheach of these wholesalers. Each Equity Agreement generally specifies the territory in whichthe wholesaler is permitted to sell Abs products, the brands that the wholesaleris permitted to sell, performance standards applicable to the wholesaler, procedures to befollowed by the wholesaler in connection with the sale of the distribution rights, andcircumstances upon which the distribution rights may be terminated. The remainder of ABIsUS beer sales in 2007 were made through 13 branches, owned directly or indirectly by ABI,that perform similar sales, merchandising, and delivery services as the independentwholesalers in their respective areas. ABIs peak selling periods are the second and third

quarters.


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Import brands are distributed through a combination of Abs wholesalers as wellas non-equity wholesalers under new or pre-existing arrangements in place at the timeAbsolute began importing such brand.

Performance overview

Absolute has achieved stable top-line growth over the past 3 years (3.8% CAGR)sustained by volume (2.4% CAGR) and price increases. Operating margins are stabilisingdespite a challenging cost environment, with an EBITDA margin (adjusted for non-recurringitems) between 23-24% in 2005, 2006 and 2007. Cash flow generation has remained strong withoperating cash flow before change in working capital of c. $3.0bn in 2007 and c. $2.5bn in

2006).

On February 21, 2008 Abs management reviewed the company's strategies toaccelerate US beer sales and profitability, and reaffirmed the company's 7 to 10% long-term

earnings growth objective. The company has renewed its marketing messages, and redirectedand enhanced its marketing and media resources to meet the demands of a changingmarketplace. The company plans to increase total media spending and will focus its nationalmedia spending on fewer brands. In addition to volume, Abs management plans toincrease focus on cost management to accelerate US beer profit growth. Absexpects a strong revenue per barrel performance in 2008, with the increase on core brandsgreater than in 2007.

Exhibit 10.3

Abs key historical financials

$mm 2004A 2005A 2006A 2007A 04-07 CAGR

Net sales 14,934 15,036 15,717 16,686 3.8%

% growth 0.7% 4.5% 6.2%Cost of sales (8,982) (9,607) (10,165) (10,836) 6.5%

% sales (60.1%) (63.9%) (64.7%) (64.9%)

EBITDA 4,294 3,571 3,708 3,864 (3.5%)

% margin 28.8% 23.7% 23.6% 23.2%

Depreciation & Amortisation (933) (979) (988) (996) 2.2%

% sales (6.2%) (6.5%) (6.3%) (6.0%)

Taxes (1,163) (811) (901) (970)

Net capex (1,090) (1,137) (813) (870) (7.2%)

% sales (7.3%) (7.6%) (5.2%) (5.2%)

Decrease (increase) in NWC (182) 51 189 (24)

% sales (1.2%) 0.3% 1.2% (0.1%)

Source: Abs reports EBITDA does not include equity income. Adjusted for non-recurring items: Litigation settlement of $(105)mm in 2005

and Gain on sale of distribution rights of $27mm in 2007


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Exhibit 10.4

Abs P&L overview

14.9 15.015.7

16.7

4.33.6 3.7 3.9

23.2%23.6%

28.8%

23.7%

2004A 2005A 2006A 2007A

% EBITDA marginNet sa le s ($bn) EBITDA ($bn)

2004-2007 Sales CAGR 3.8%

Source: Abs reports

Note: EBITDA does not include equity income

As shown below, Abs business breakdown has remained relatively steady since2004, with Domestic Beer accounting for 75% of net sales and 84% of pre-tax earnings in 2007.

Exhibit 10.5

Abs breakdown of revenues and profit

Total = $2,423mm

Total = $16,686mm

Total = $2,999mm

Total = $14,934mm

2007A2004A

Net sales

Earnings beforetax

Domestic beer 84%

Entertainment 8%

Packaging 5%International beer 3%

Domestic beer 75%

Packaging 11%

Entertainment 8%

International beer 7%

Domestic Beer 88%

Entertainment 5%Packaging 4%


Domestic beer 78%

Packaging 10%

Entertainment 7%


2007A2004A

Source: Abs reports

Note: Does not include equity income (net of tax) of $404.1mm in 2004 and $662.4mm in 2007

Includes $388mm in 2004 and $509mm in 2007 of net sales reported under Corporate and Eliminations, not reflectedin presented breakdown

Includes $(748)mm in 2004 and $(893)mm in 2007 of EBITDA reported under Corporate and Eliminations, notreflected in presented breakdown


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US beer market overview

The US market is mature with relatively low volume growth (0.7% CAGR 1995-2006). Whiledomestic beer has been growing at a modest CAGR of 0.3% between 1995 and 2006, theimports segment has displayed a strong 7.9% CAGR over the same period. The recent importagreement with KGB has added premium brands to Absolutes offerings.

Brands

The table below shows examples of Anheuser-Buschs key brands.

Budweiser family

BudweiserBudweiser is a Regular American-style lager, created in 1876 by company founder Adolphus Busch.

It is a medium-bodied, flavourful, crisp and pure beer with fresh and subtle fruit notes, a delicate malt

sweetness and balanced bitterness for a clean, snappy finish. Brewed using a blend of imported and

classic American aroma hops, and a blend of barley malts and rice. Budweiser is brewed with time-

honoured methods including kraeusening for natural carbonation and beech wood ageing.

Throughout its history, Budweiser has had spectacular and very successful advertising (e.g. New York

Citys Times Square as early as 1902, or the Whassup! campaign that won the Grand Prix award in 2001

at the 48th. Annual International Advertising Festival in Cannes). Budweiser has been an Olympic

supporter since 1984, is currently the Official International Beer sponsor of the Beijing 2008 Olympic

Games, and is the Official Beer of the 2010 FIFA World Cup in South Africa.

Bud LightBud Light is a Light American-style lager, created in 1982. It has a light-bodied brew with a fresh, cleanand subtle hop aroma, delicate malt sweetness and crisp finish.

Bud Light is currently a sponsor of Major League Baseball, the National Basketball Association, the NationalHockey League and a number of domestic teams within each league.

Bud Light is the worlds best-selling beer. Its volume has grown more than any other Top 10 beer brand.Additionally, since 1997, Bud Light has grown market share among adults across virtually every age, genderand demographic group.

Busch family

BuschBusch is a American-style lager. It is brewed with a blend of premium American-grown and imported hopsand a combination of malt and corn to provide a pleasant balanced flavour.

Since being introduced regionally in 1955, the Busch beer brand family has grown to become one of thetop-selling value beer brand families. Busch also holds a noted place in Anheuser-Busch history as the firstnew brand after the repeal of Prohibition.

Michelob family

MichelobMichelob is a European-style lager, with a malty and full-bodied aroma. Michelob is brewed with 100%malt, a blend of two-row and caramel malts, and are balanced with European noble aroma hop varietiesfrom the Hallertau and Tettnang regions.

Michelob was created in 1896 to be the draught beer for connoisseurs. For 66 years, it was distributedonly as a draught product, and only to the finest retail outlets. In 1961, it was introduced in a bottle thatbecame a legend within its own right, with its unusual hourglass shape and gold foil shrouded neck.


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KirinKirin is a Japanese-style pilsner, brewed including two-row barley malt and the finest Saaz hops importedfrom the Czech Republic. Kirins proprietary yeast strain is used along with a special first press brewingprocess, which extracts the most flavourful portion of the ingredients.

Tiger BeerTiger Beer is a Pilsner-style, golden lager, with a smooth, full-flavoured taste, a classic hop character andmalty body. It is brewed at the Asia Pacific Breweries Singapore brewery using a traditional bottomfermentation process and a combination of two imported hops. The naturally high carbonation produces acharacteristically creamy head and a smooth, full-bodied taste.

Specialty beers and drinks

TequizaTequiza is a fruit beer. Traditionally brewed with a combination of malt and cereal grain, and balancedwith premium American hops. Tequiza is then infused with the natural flavour of lime and real blue agavenectar, which produce a slightly sweet fruit and citrus aroma.

Absolute investment in Grupo

Grupo is a holding company which owns 76.75% of Diblo, a sub-holding company whichproduces, distributes, and sells beer, and effectively represents Grupos operations.Grupo operates seven breweries in Mexico with a total annual capacity of60mm hl.

Originating in 1925, Grupo exports five brands to more than 150 countries, and is the soleimporter of Abs products in Mexico.

Grupo's top brand is Corna (the leading Mexican beer since 1981); other brands includeCerverza Pacifico, Grupo Estrella, Montego, and Grupo Especial. Grupo is the leadingbrewer in Mexico.

Grupos licensed brands include Tsing, and water brands Santa Mara and Nestl PurezaVital.


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Since an investment agreement in 1993, Abs has owned a 23.25% economicinterest in Diblo and a 35.12% economic interest in Grupo. Thus, Abs directly andindirectly owns a 50.2% economic interest in Diblo but does not have control over Diblo or Gruppo.

Grupo brands

CornaCorna is a 4.6% ABV Pilsner brewed in Mexico by Grupo. It is available in 150 countries and is the mostexported beer from Mexico. It is most often enjoyed with a slice of lime.

GrupoEspecialAfter Corna, Grupo Especial is Grupo's most important brand. It is one of the ten most popular importedbrands in the US. It is a Pilsner lager and is known for its full-bodied flavour.

Abs investment in TsingThe TsingBrewery was founded in 1903 by German settlers in Qingdao, China.

Tsing Lager is brewed and bottled by the Tsing Brewery-the 10th largest brewery in theworld. Also, Tsing Lager is the 12th largest beer brand worldwide.

Introduced to the United States in 1972, Tsing soon became the top-selling Chinese beer inthe US market and has maintained this leadership position ever since.

The Tsing brand is sold in more than 50 countries worldwide and accounts for more than50% of Chinas total beer exports. In fact, Tsing is the number-one branded consumer

product exported from China.


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11.Industry overviewPlease note that this section of memorandum was prepared using industry reports Plato LogicWorld Beer Report (October 2007) and Datamonitor Global Brewers Industry Profile (April

2008).

The global market

The global brewing sector consists of the total revenues generated through the sale of beer,

cider and flavoured alcoholic beverages (FABs). The global beer market represents 96% ofthe global brewers market and grew by a CAGR of 4.6% in volumes during the period 2003-2006. Global beer consumption stood at 1,684mm hl at the end of 2006.

Exhibit 11.1

Global brewers sector volume (20032010)

1,4721,541 1,585

1,6841,761

1,933

2.3%

4.6%

6.2%

2.9%

4.7%

0

500

1,000

1,500

2,000

2003A 2004A 2005A 2006A 2007E 2010E

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%CAGR 4.6%

% growth p.a.Volume (mm hl)

Source: Plato Logic World Beer Report, 9th October 2007

Note: The number shown for 2010E growth is 2007E-2010E CAGR

Among the various types of beer are lagers, dark beers, and non- and low-alcohol beers.Lagers are by far the most commonly consumed beers, although there is a growing market forother beer, albeit from a much smaller base. Beer is made from a number of ingredientsincluding water, yeast, hops and malt extract. Water is the largest ingredient and manybrewers use spring water to make sure it is as pure as possible. The beer production process

consists of converting barley grain into malt, brewing and fermenting. Many brewers also addother ingredients such as spices, sugar, fruit and honey, to obtain their own unique flavour.

As shown in the graph below, packaging in bottles represented in 2006 64% of the volumes,cans 20% and draught 11%. Packaging breakdown has remained relatively stable between 2003and 2006. PET packaging has grown with a 28% CAGR in 2003-2006 but remains below 5% oftotal packaging.


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absking case information memorandum (2008)

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