M&A Announcement

Nov 11, 2015

Slides

Day, ladies and gentlemen, and welcome to the Anheuser Busch InBev Investor Conference Call. Hosting the call today from AB InBev is Carlos Brito, Chief Executive Officer and Mr. Philippe Dutra, Chief Financial Officer. To access the slides accompanying today's call, please visit AB InBev's website now at www.abinbev.com or the recommended transactions microsite at www.globalbrewer.com and click on the Investors tab. Please note the disclaimer in relation to forward looking statements on Slides 23 of this presentation. Today's webcast will be available for online demand playback later today. At this time, all participants have been placed in a listen only mode and the floor will be open for questions from investors and analysts following the presentation. It is now my pleasure to turn the floor over to Brito. Sir, you may begin. Well, thank you, Dan. Good morning, good afternoon, everyone, and thank you for joining us on the call today. I'm here with our CFO, Filipe Guteru. Today, we announced that we have reached an agreement with SABMiller on the terms of a recommended transaction to combine our businesses and build the 1st truly global beer company. During this call, I'll walk you through the transaction highlights and provide additional color and our vision for the combined company. Let me first provide some quick highlights of today's announcement. We're pleased to have reached an agreement to combine the 2 companies. SABMiller shareholders would be entitled to receive £44 per share in cash or a partial share alternative called the PSA comprised of 0.483969 restricted shares plus £3.7788 in cash for each SABMiller share. These terms are unchanged since we announced the possible offer on October 13, 2015. The FABMiller Board of Directors has unanimously recommended the cash offer. In addition, AB and BAF has received irrevocable undertakings from Altra and Bevco who collectively own approximately 40.45 percent of SAB Miller shares to vote in favor of the transaction. We expect to complete the transaction during the second half of twenty sixteen subject to regulatory and shareholder approvals. We believe the rationale for this combination is extremely compelling and will be in the best interest of both companies consumers, shareholders, employees, wholesalers, business partners and the communities which we serve. 1st and foremost, this combination would create the 1st truly global beer company, which would take its place as one of the world's leading consumer products companies. Importantly, we would bring together geographic footprint that's largely complementary and that provides access to key high growth regions such as Africa, Asia and Central and South America. We believe that the African continent in particular has very attractive markets and growth prospects and would be a critical driver of growth for the combined company, building on the strong heritage and success of SAB Malorie in the region. The combined company's joint portfolio complementary global and local brands would also provide more opportunities for consumers globally to taste and enjoy the world's best beers. In addition, the transaction would bring together the experience, commitment and drive of both companies' employees to create a world class combined global talent pool. In pooling resources and expertise, the combined company will also make a greater and more positive impact in the communities in which we live and work by providing opportunities all along the supply chain and aspiring to the highest standards of corporate social responsibility. Finally, we believe the transaction will deliver substantial value through revenue, cost and cash flow synergies. Let me run you through the financial highlights of the transaction. We believe the offer provides SABMiller shareholders with an extremely compelling opportunity. The cash offer of £44 per share represents a premium of approximately 50% to SABMiller's closing price of £29.34 on September 14, which was the last day prior to the renewed speculation of an approach from AB InBev. 2nd, the partial share alternative represents a premium of approximately 43% to SABMiller's closing share price of £29.34 on September 14. As we've discussed previously, the PSA will take the form of a separate class of restricted shares and would be limited to maximum of 326,000,000 shares. Alta and Bevco have signed irrevocable undertakings to elect for the PSA in respect of their entire beneficial holdings of approximately 655,000,000 SEB Miller Shares, which would provide them with approximately 317,000,000 restricted shares prior to any pro rata scale back. SMB Miller shareholders will be entitled to receive dividends declared or paid by SMB Miller in their ordinary course prior to completion of the transaction. The cash elements of the transaction will be financed using AB InBev's internal financial resources and new $75,000,000,000 committed senior facilities. The transaction will occur in 3 steps. First, the shares of SABMiller will be acquired by NewCo, a Belgian company formed for the purpose of this transaction in exchange for the issue of NewCo shares to SABMiller shareholders. 2nd, AB InBev will acquire NewCo shares held by the former SABMiller shareholders who elect for cash and a portion of the NewCo shares held by shareholders who elect for the PSA. 3rd, AB and BIA will subsequently merge into NewCo so that following the completion of the transaction, NewCo will be the new holding company for the combined group. Post transaction, the New Company's Board of Directors will consist of a minimum of 3 and a maximum of 15 directors, 3 of whom will be independent. Holders of the restricted shares will have the right to propose up to 3 directors. AD InBev's reference shareholder, the Stiften will have the right to propose 9 directors. A Chairman will be appointed from 1 of the independent directors. The transaction has already received support from our largest shareholders. The station, EPS and BRC who own approximately 51.8 percent of AB InBev shares have provided irrevocable undertakings to vote in favor of the transaction. We intend to establish a secondary listing on the Johannesburg Stock Exchange, the GSE for AB InBev shares as soon as reasonably practical. The new company will be legally incorporated in Brussels and we intend for it to be listed on Euronext Brussels with a secondary listing on the JSE and ADRs traded on the New York Stock Exchange. One of the most compelling aspects of this transaction is that it brings together 2 companies with largely complementary footprints. However, as we've said from the beginning, we're committed to bringing all potential regulatory reviews to timely and appropriate resolution. We're pleased to announce today that we have agreed upon the sale of SABMiller's interest in the MillerCoors joint venture and the global Miller brand to Molson Coors upon the closing of our transaction with SAB Miller. Molson Coors has agreed to acquire SAB Miller's 50% voting interest and 58% economic interest in MillerCoors. The total transaction value of $12,000,000,000 in cash also includes the sale of the Golda Miller brand currently sold in over 25 countries as well as related trademarks and other intellectual property rights. The sales condition upon the completion of AB InBev's combination with SABMiller and is subject to regulatory approvals and other customary closing conditions. Based on latest fiscal year's results, the combined company would have generated revenues of $64,000,000,000 and EBITDA of $24,000,000,000 These figures exclude the results of SABMiller's joint ventures and associates. As you can see on Slide 11, the combination of AB InBev and SABMiller would create a truly global brewer that would take its place as one of the world's leading consumer products companies. You're already familiar with SABMiller, but I wanted to briefly touch on some highlights of their business. We have the highest respect for SABMiller, its people and its leadership. We've admired this company for a very long time for a number of reasons. They are one of the largest beer and beverage companies in the world, selling approximately 324,000,000 hectoliters of beer and soft drinks during the last fiscal year. The company has a strong portfolio of brands across both developed and developing markets, has strategic partnerships with Castel, CRE and EFS and is an anchor bottler for the Coca Cola Company in Africa. SABMiller is particularly strong in developing markets and a significant portion of the company's revenues and EBITDA are generated from those markets. They have an impressive footprint and deep expertise in both Africa and Latin America with 33% and 35% of revenues derived from those regions respectfully. Approximately 31% of their sales come from Europe and Asia Pacific. In those markets, SABMiller is known for their locally loved and internationally famous brands as well as their initiatives to improve people's lives and build communities. Would now like to discuss in more detail why we're so excited about this combination and the opportunities it provides for all stakeholders. Together, AB InBev and SCB Miller create a truly global business. North America and Latin America will make up over half of our combined business and we will have meaningful operations in Africa, Asia Pacific and Europe, a highly attractive mix of developed and developing markets. The map on Slide 18 demonstrates that our companies have largely complementary geographic footprints. AB and BAP does not currently have a mature presence in Africa, whereas SABMiller and its associates have an extensive operating history and presence there. SMB Miller also has a great market position market positions in Colombia, Ecuador, Peru and Australia. AB InBev has a strong presence in markets including Canada, Mexico, Brazil, Argentina and parts of Western Europe such as Belgium, U. K, Germany, France, Netherlands and Italy. We believe our combined distribution network would enable us to bring more beer to more consumers and therefore drive more growth. Both companies have deep expertise in and a long standing commitment to building brands. For example, following the combination with Amherst Busch, AB and Beth has successfully grown Budweiser globally with international sales now accounted for more than half of the brand's total volume. I've also had success in growing corona globally since closing our transaction with Grupo Moguelo in 2013. At the same time, SABMiller has built great national iconic brands such as Zygiel in Colombia and Castle in South Africa. Both AB InBev and SABMiller have strong and experienced teams that have developed marketing campaigns that have resonated worldwide like Budweiser's Brew the Hard Way and nationwide like Coming Together With the Castle. We've also sponsored some of the world's most popular sporting events from the FIFA World Cup to the NFL and MLB in the U. S. Together, we'll continue to create even more opportunities to bring visibility to our brands and leave a lasting impression on our consumers. Our focus as a combined company will be to continue to deliver exciting memorable and successful campaigns that resonate with consumers and provide relevant brand and lifestyle experiences. Most of our companies have had considerable success in innovating in the total alcohol space with near beer products. Have introduced hard ciders, flavored malt beverages and cocktail flavored beers. We've also introduced low alcohol and non alcohol versions of some of our most popular beer brands. In addition, we've had success innovations in other areas, including packaging and dispense. Combining our R and D capabilities and consumer insights would allow us to further develop new and exciting consumer offerings. This transaction is about combining our expertise to accelerate revenue growth in one area which will drive much of that growth is Africa. African continent has a number of very attractive markets with increasing GDPs, a growing middle class and expanding economic opportunities. It's also becoming more important in the context of the global beer industry. It is estimated that between 2014 2025, the African beer market will grow by more than 50,000,000 hectoliters. That means beer volumes in Africa are expected to grow at almost 3x the rate of volumes in the rest of the world. From our perspective, this is an excellent time to enter this market through a team that already has a long and impressive track record and a deep understanding of the region. The significance of entry into the African market goes well beyond these growth statistics. We have the greatest respect for SABMiller, its heritage, strong history and long standing commitment to the region dating back to the 19th century. Taking into account Africa potential, along with SAB Emblaer's deep expertise and success in the region, we expect Africa to continue to play a vital role in the combined company. We intend to seek a secondary listing of AB InBev's ordinary shares on the JSC as soon as reasonably practical after today's announcement. With the closing of the transaction, we intend that the ordinary shares of NewCo will also be listed on the JSE through a secondary listing and would replace the proposed secondary listing of AB InBev. We also intend to have a local board in South Africa and Fort Johannesburg to continue to be the regional headquarters for the combined group on the African continent. In addition, AB InBev's at Indy AB InBev admires S. E. B. Miller's long track record of supporting the progress of South African society and their deep engagement with local stakeholders. AB and B is supportive of the South African government's economic transformation objectives and is committed to continuing South Africa's contribution to meaningful black economic empowerment. AB InBev recognized the importance of the Zenzele broad based black economic empowerment scheme established by SABMiller in 2010 and the scheme's objective of providing long term economic benefits to broad range of previously disadvantaged South Africans. AB InBev and SCB Miller have agreed to work together as a priority to develop an appropriate proposal in relation to the scheme, enabling the ongoing investment by its various groups of participants in SABMiller's South African business after the completion of the transaction. In summary, we admire the many achievements of SABMiller on the continent and believe there is a huge amount that our combined company can achieve together in the region. We believe very strongly that global companies such as ours have responsibility to contribute to the world around us. AB InBev has been a leader in this area through our Building a Better World platform. SMB Miller has similarly focused on corporate citizenship with a strong mission to improve livelihoods and help build local communities. We both operate in many communities that face big social and environmental challenges, and we know that long term business growth and success depends on the prosperity and resilience of these communities. Both companies have developed strong partnerships to benefit communities in the environment through programs such as Smart Barley, Together For Safer Roads, Better Barley, Better Beer and Prosper. We believe combining our 2 companies and pooling our sources and expertise in this area will allow us to make an even greater and more positive impact on the world. We believe that the combined group will generate attractive synergies and create additional shareholder value. We estimate incremental recurring run rate pretax cost synergies of at least $1,400,000,000 per annum, in addition to the $1,050,000,000 of cost savings identified by SABMiller in their presentation on October 9, 2015. We expect incremental synergies to be phased in over 4 years following the completion of the transaction, reaching the recurring run rate by the end of the 4th year. In addition, we currently expect the delivery of synergies to require estimated one off cash costs of approximately $900,000,000 to be incurred in the 1st 3 years after the completion of the transaction. Importantly, we remain committed to supporting gas, heavy and middleer brands and we expect no significant net sales in consumer and customer facing sales and marketing investments within the cost base of S. A. B. Miller. We have identified 4 areas where we believe cost savings can be achieved. 1st, procurement and engineering represents approximately 20% of total savings as a result of combining the sourcing of raw materials and packaging. 2nd, brewery and distribution efficiencies represent approximately 25% through brewery, bottling and shipping productivity initiatives as well as optimizing of the brewing and distribution processes across our combined geographies. 3rd, best practice sharing makes up approximately 20% through cost management efficiencies and productivity enhancements across the group's administrative operations. Lastly, corporate and overlapping regional headquarters make up approximately 35% of expected synergies. Finally, on the revenue and cash flow side, we see a number of opportunities. While we're not publicly quantifying these opportunities at this time, we see significant potential for value creation from use of our combined global distribution network in order to expand brand portfolio sales worldwide and by drawing from the innovation successes of both companies. We have already established committed financing for this transaction with our key relationship banks. As you can see on Slide 26, we have $75,000,000,000 of new committed senior facilities, of which $35,000,000,000 are 3 5 year term loans. The balance incorporates 3 bridge facilities, 1 bridge to disposals and 2 bridges to cash flow and debt capital markets funding. As we have said on previous occasions, we remain committed to strong investment grade rating and an optimal long term capital structure ratio approximately 2 times net debt to EBITDA. This target remains unchanged. This transaction is subject to regulatory approvals in several jurisdictions including the European Union, the U. S, China, South Africa, Colombia, Ecuador, Australia, India and Canada, and intend to work closely with the relevant authorities and seeking to bring all potential regulatory reviews to timely and appropriate resolution. In terms of timing, we expect the transaction to be completed during the second half of twenty sixteen subject to satisfying the relevant regulatory clearances. In wrapping up, I'd like to reiterate that we believe the strategic rationale behind a combination with SABMiller is extremely compelling from the immediate value realization it offers to SABMiller's shareholders to the growth prospects it creates for the combined company as well as the opportunities for us to build a better world together. To put it simply, we believe more can be achieved together than apart. With that, I'd like to take your questions. Dan, please? Our first question comes from the line of Edward Mundy from Nomura. Please go ahead, sir. Good morning. Good afternoon, everyone. Two questions, please. Just on the €1,400,000,000 of cost savings, I was wondering if you could provide some color on the phasing over 4 years and also as to whether they might fall by region. And on S and P's existing $1,000,000,000 cost and efficiency program, there's another $600,000,000 outstanding. Is there any scope to accelerate that? And then just some technical questions. I was wondering whether you could provide some guidance on the tax rate for the acquired assets and also your dividend policy going forward? Okay. So let's go to synergy first. I mean in terms of synergy, what we announced today is that the estimated incremental synergies of at least $1,400,000,000 per annum should be added to their $1,050,000,000 that they already previously identified and communicated. The important thing here and those are cost synergies only. The important thing here is that no significant net savings or synergies are expected in consumer and customer facing sales and marketing activities. So that's very important. And we also said that the synergies cost synergies are going to be in 4 buckets pretty much: procurement and engineering, brewing distribution efficiencies, best practice sharing and corporate and regional headquarters. So and this series would have a one off cost of $900,000,000 to be incurred in the 1st 3 years after completion. In terms of their synergy program that they communicated to the market some weeks ago, the 1.05, percent, some of it has already been achieved. In terms of acceleration, that brings me to a theme of integration. I mean, of course, we want to be very cooperative both companies in between now the 2.7% and closing. And we intend together with SAB to put together like other companies in the UK have done an integration team to perform a detailed review of business activities and synergies and also to help us on the closing. So I mean that's what we intend to do in terms of synergies. In terms of taxes, we're not going to at this point, we're not going to detail anything in terms of taxes of the acquired assets. We have to understand that at this point, we've been all focused to getting to the 2.7. And today, of course, we shift gears and start redirecting resources towards closing. But to all very glad that we have come to this 2.7 and now the next one is a closing. The dividends was also a question. Okay. In terms of capital allocation priorities, we have to say that they are unchanged from the objectives we've always communicated to the market. And those are, 1st and foremost, we're going to invest in organic growth of the business, more has done that. 2nd, we'll look at selected M and A with a strict financial discipline. That's the objective of the call today. 3rd, the dividend yields, we intend to get to a place that's comparable with other consumer goods companies, 3% to 4% yield. We also said in my speech that the optimal capital structure remains unchanged in terms of our objective to get to 2x net debt to EBITDA. And at this level, 2x the return of cash to shareholders is expected to be comprised of both dividends and share buybacks. So no change in our capital allocation policy or objectives from what was communicated in other quarters in conference calls like this. Okay, thanks. And as a quick follow-up, I mean, are you able to share with us how long you think it's going to take to cover your cost of capital on the deal? Cost of capital. No, no, we're not being we're not giving any guidance today on that matter. Okay, thanks. Thank you. Our next question comes from the line of Mark Swartzberg from Stifel. Please go ahead, sir. Yes, thanks and congratulations, Brito. This is quite an accomplishment and I know you guys have been working on it for quite some time. So to you and everyone, hats off. This is unlike Anheuser Busch, unlike Modelo where you're integrating really one region primarily. Here you have multiple regions that are going to be integrated. So question 1 is, can you speak to your organization's skill set addressing that? And question 2, kind of related to that is your experience when leadership talent you want to keep actually departs, what your experience dealing with that, how that comes to bear in this situation? So I guess just going back to other transactions that we've done in the past, Mark. If you remember the Interbrew 1 in 2004, that involved many geographies. Of course, compared to the AB-one and the Modelo one, there were those are more focused in 1 or a couple of geographies, but the Integral 1, 10 years ago, 11 years ago involved many geographies. So our guys do have experience with multiple geographies and we have a great team that's excited about both the organic side, but also about opportunities like this. Of course, most people in the company, 90 plus percent of the people as always will continue to be focused on growing our top line and delivering on our organic business. But we'll have a group of people that will be deployed to work with our future colleagues on the integration efforts. I mean, what we try to do, Mark, every time we have a transaction like this is to get to know people as fast as we can. So we can get them also excited about what we're trying to build. And normally, if you go back to a transaction in the past, everything that was done in terms of integration of the new company was done mostly by the people that were there before. It's just that when people see the opportunity that the new company offers in terms of career, in terms of getting our brands to more consumers, in terms of doing a better job in our Better World platform, people do get excited and they rise to the occasion and they help us big time in integration. And with SCB, experience has been one of our cooperation. We've been cooperating a lot to get to this 2.7. And our expectation is that cooperation will be better every day because as you get to know more people and as they we share our combined dream of building this truly global company. So that's how we proceed on this kind of combinations and integrations. That's great. And if I could follow-up, unrelated South Africa, can you give us some update on how far you are in your conversations with regulators there and what the status is on that aspect of the conversation? Well, South Africa and Africa are really key to this I think a key to S. A. Miller currently and they will be key to the new combined company. So South Africa, of course, it's a key country. It's where SAB has its roots and heritage. We respect that a lot. We admire what SAB has been able to accomplish and the reputation it has built in South Africa. We intend to continue the steps they've taken. And we also proposed or communicated our intention to have a secondary listing of AB and Babs ordinary share on the Johannesburg Stock Exchange to have a local Board in South Africa that will be critical to the future success of the combined group in the continent and also for Johannesburg to continue to be the regional headquarters of the combined company. So we also said that we support SAB's deeply deep engagement with local stakeholders and the society at large. And we do recognize the important steps they've taken in terms of black empowerment, the black economic empowerment and also the Zen Azale scheme. And we want to continue all those initiatives as we look into the future with the new company. So we admire a lot what they have accomplished and the reputation they've built, and we intend to continue to build on that very strong base. Are you far along in getting a reaction in South Africa to what you've proposed to knowing how well that sells, so to speak, with the regulators? Yes, Mark, as I said before, before the 2.7 was very hard for us to engage with anybody because of the lack of a formal official offer, right? So now that we have one today, this will, as I said before, today we're shifting gears from getting to the 2.7, not to get to closing. And it will be very important for us to be in touch with authorities and regulators and joint venture partners in many geographies. And that's what we intend to do as we shift gears now to the integration and to steps necessary to get to closing. Fair enough. Great. Thanks, Brito. Thanks, good morning. Our next question comes from the line of Trevor Stirling from Bernstein. Please go ahead, sir. Hi, Brito. Two questions from my side, Brito. First one is why NewCo? Why use that particular structure? What advantage does that give you in the transaction? And the second question, maybe one for Philippe is are you doing any hedging of the currency mismatch between the funding in dollars and the offer in sterling? Well, Trevor, in terms of the new co, there's a structure that's being proposed here and that's totally detailed in the 2.7 announcement today is one that we did in order to it was the best way to merge a U. K. And Belgium company really. So that's why we thought and came up with this structure. And again, the details of the structure is all in the 2.7. And Philippe? So on the currency exposure, Trevor, yes, we take into account the pound exposure as part of our basket of exposures, then we do hedge that. Our next question comes from the line of Pablo Zwanek from SIG. Please go ahead. Good morning and congratulations. Two questions. On the $1,400,000,000 synergies, does that assume that you're pretty much keeping all the other businesses? What's the assumption embedded there? Because I suppose that if you have to sell other chunks, that number could change. And the second question, to close to reach to this point, it seems that you had to get the middle class transaction done. But should we assume that you have a high probability of being able to keep most of the other businesses? I'm talking particularly about the stake in Sierra Snow, for example. Yes, Pablo, as you can understand, I mean, as I said before, now that we have an official offer confirmed by both boards and recommended and now public in the public domain. Now we're going to have the opportunity to really shift gears and start working towards all the different steps that will take us to get to closing. And that includes any regulatory or contact with our torts and regulators in many of the jurisdictions as well as joint venture partners. So today we're really shifting gears and with the record sources to go towards that. In terms of the synergies, I mean what we have is what's in the 2.7. At this point, of course, we cannot be very detailed on our strategy in terms of how to deal with different regulators. So at this point, we cannot be more specific on your first question, unfortunately. And just a quick follow-up. So going to agreements with Pepsi and Coke, can you be a butler for Pepsi in Latin America and a butler for Coke somewhere else in the world, Africa in this case? What can you say in that regard? Again, 2 words to speculate. We're shifting gears today. And beginning today we have an offer to talk about we'll be contacting authorities, regulators and joint venture partners. So that's our intention to as we prepare for closing. Thank you. Our next question comes from the line of Carl Walton from UBS. Please go ahead, sir. Good afternoon. Good morning. Thanks for the questions. Just a couple. In terms of the cash flow synergies, I know there's no quantification at this stage, but maybe qualitatively, could you confirm that this would be largely the payables line, where there's the most upside? And is there any comments you can give by region where opportunities might be? And then secondly, we noted there is a Mexico listing also being proposed here. Could you talk about the thinking behind that? Thanks a lot. Well, the Mexico listing is already one that exists. It's already in place. We're just confirming, reconfirming that, that will continue to be the case. So it's not new. And Carl, the first question is still in terms of synergies. Today, we announced the $1,400,000,000 at least $1,400,000,000 on top of their 1.05 base synergies that they announced some weeks ago. But these are only cost synergies. We also said in our announcement that we see opportunities in terms of top line and cash flow synergies, but decided at this point not to point to Filam. But of course, you can be assured that the cash flow would be a mix of everything that works that involves working capital as one of the main drivers. So everything that's in there. Okay. Thank you. Thank you. Our next question comes from the line of Robert Ottenstein from Evercore. Please go ahead, sir. Congratulations. I was wondering if you can talk to us a little bit about the rationale of selling the Miller brands globally as opposed to just in the U. S? And then a little bit about how you're thinking about Peroni, Pilsner, Oakville, Grolsch as part of your portfolio as it stands today? Yes, Robert. Unfortunately, I won't be able to call it too much because that involves our strategy in dealing with some overlaps and things. So we're very happy that we were able to announce today the deal with Molson Coors. That means that we're not going to be acquiring anything in the U. S. After the deal is approved, of course. So that's very interesting. So that's all I can say at this point. Okay. Can you make any comments at all in terms of a role here for Ambev and whether Ambev will get eventual ownership of the South American assets? Well, there's an AB in that deal. So that's as you've seen since the first announcement, this has always been an AB in that deal. All right. Strike 2. Can you maybe talk a little bit about how you're thinking about obviously the huge transaction, a lot of moving pieces, a lot of things to get done over the next year. How are you adapting the ABI organization to make sure that you don't miss a beat managing the base business and then at the same time close what is still a very tough transaction, a lot of moving pieces and perhaps maybe talk a little bit about what David Almeida will be doing. His position moved. It was said that he's kind of your special assistant or special assignment. Perhaps you can talk about how that fits into the picture? Well, that's a very good point, Robert, because we agreed with our Board that we would only engage in a transaction like this if we could guarantee that the organic business would not be distracted or affected in any way. So we've advised a couple of things inside the company in terms of teams, incentives that are specific to that matter. So as to guarantee that the organic people in the organic business will continue to have attention and resources it deserves and that integration and the new business would have the resources it's needed that needs. So a very good question. Rest assured that that was a big point that we discussed a lot in preparation to get to today. And it's something that we take very seriously. We want to have the organic business you saw last quarter, acceleration of top line. We're very committed to it. And there's not going to change with the transaction. Thank you very much. Thank you, Robert. Our next question comes from the line of Chris Pitcher from Redburn. Please go ahead. Yes. Hi. Just a couple of questions, please. In terms of the debt that you've announced and given us details on today, you talk about an average cost of LIBOR plus 110 basis points. Will you be looking to fix the cost of debt on completion or prior to that? And then secondly, a couple of clarifications. I mean, you weren't 100% clear whether you were going to stick to your dividend, your short term dividend policy at the ABI level of offering a 3% to 4% yield over the next 12 to 18 months. Can you reassure us that the payout will remain as is? And then can you give us any feel for when you think you can get back down to 2x net debt EBITDA? Well, Chris, I cannot go that far to speculate on the specific payout. But as Brito said, the capital allocation priorities remain unchanged, and the Board has just announced a dividend that will actually be paid next Monday. And in light of this transaction already and taking into account all the elements in connection to this transaction. So that is the piece on the dividend. On the funding costs, yes, we were able to work together with our core relationship banks and put in place the ARI Raboot financing, which is composed of $35,000,000,000 term loan, 3 5 years. There is a $10,000,000,000 bridge to disposal that with today's announcement of the disposal of the 38% owned by SAB on the MillerCoors JV in the U. S. Is essentially dealt with. And then 2 tranches being a 2 year and a 1 plus 1 year of $15,000,000,000 each. So yes, the finance is in place, and that is what we need to get the deal closed and move on. And of course, we will continue to assess the capital markets to work on the funding. And therefore, as we take into account the current yields implied on the outstanding loans and so on and so forth, And depending on the maturity of the final debt structure, the cost of borrowing should be slightly higher than what is highlighted here in terms of LIBOR plus $150,000,000 Can you give us an idea of how much higher? Because when you did the Budweiser transaction, I admit it was a very different credit environment then. We're keen to pick out right away. Very different. You shouldn't look into that, but today we have no forecast for that or no public forecast for that. Our next question comes from the line of Richard Wittegan from Kepler Cheuvreux. Please go ahead, sir. Yes, thanks. Good morning. I have two questions. First of all, I understand you cannot say too much on the future international brands portfolio of the new company, but can you share your thoughts on the Budweiser brand and in which SAB Geographies you see most potential for the brand? And then the second question is perhaps can you also talk about how you had the pounds exposure you have as a result of the deal? In terms of Richard, hi. In terms of Budweiser, I would say even more. I mean, we see lots of opportunities in the new footprint or in the combined footprint for Budweiser, Corona, seller to our global brands. I mean, I think we had some wide territories. Of course, we always have, But this operation gives us access to many very interesting markets where I believe consumers would have more choice as we combine because they're going to be able to access brands that today just not part of their portfolio choices. So as we said, this business, this combination is about growth. It's about value creation. But more than anything, it's about more choice to consumers. And that's a great opportunity. You touched it in a great opportunity, which is to develop brands like Budweiser, Corona, Stella, for example, in broader geographies. So very excited about that. On the hedging piece, we take the PALS exposure as part of our basket of risks together with interest rates, commodities, currencies and other currencies. So we rely on the correlation across the different exposures. And usually, the net resulting exposure we hedge by simply buying on a spot basis or forward or even using options as part of the hedging instruments. Okay. Thank you, Graham. We have time for one more question. And at this time, sir, there are no other questions that are in queue. But ladies and gentlemen, thank you so much for joining today's call. I would now like to pass the floor back to Mr. Brito for closing remarks. All right. Well, thank you, Dan. Many people have worked very hard to get us to this point, but there's still lots to do before we can close this transaction. In the months ahead, I'm looking forward to getting to know our future colleagues at SCB Miller because at the end, it's all about people and people is what really makes a difference. So I'm really looking forward to meeting and getting to know better our future colleagues. And with that, thank you very much for your attention. Have a great day and thank you for your time. Thank you very much. This does conclude the conference call for today. Thank you all for participating.