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NEW YORK -- Philip Morris today announced that Milwaukee-based subsidiary Miller Brewing Co. will be sold for $5.6 billion to South African Breweries plc in a deal that would create the world's second-largest brewer. The deal is expected to close in July, pending regulatory approval.
The new company, called SABMiller plc, "will immediately become the world's second-largest brewer, with arguably the best geographic footprint among all global brewers," Philip Morris CEO Louis Camilleri said in a statement.
South African Breweries will buy a 64-percent stake in Miller for $2 billion in debt and $3.6 billion in stock, while Philip Morris will initially maintain a 36 percent stake in Miller.
SABMiller's headquarters will be moved to London, with Milwaukee offices and breweries acting as a subsidiary to the larger company, Miller spokesman Michael Brophy told the Associated Press. No layoffs or job cuts are planned at these offices or at any of Miller's seven U.S. breweries. "It will be basically business as usual," Brophy said.
SABMiller will continue to compete in the United States with Anheuser-Busch Cos., the world's largest brewer, which has battered its domestic opponent on several competitive fronts of late. Profits at Miller have steadily dropped as sales of key brands declined, advertising costs increased and market share was lost to Anheuser-Busch.
The sale could easily help the embattled brewer, though. While Miller currently accounts for only 5 percent of Philip Morris's profits, the sale will give SAB a major operations foothold in the United States and reduce the company's dependence on earnings made in South Africa's weak rand currency.
"We are going to go from being a small part of a huge consumer packaged goods company to being a key component in the world's second-largest brewer," Brophy said. "We are going to be a company that's totally focused on brewing, marketing and selling beer."