Amsterdam, 22 August 2008 – Heineken N.V. announced today that it has substantially completed its review of the acquired Scottish & Newcastle (S&N) businesses:
- It has increased the expected pre-tax synergies from the acquired (S&N) businesses to GBP 145 million from GBP120 million previously (EUR 184 million and EUR 152 million respectively at GBP/EUR 1.27), to be achieved in four years. At the end of August 2008, EUR 60 million of annualised cost synergies have already been realised.
- It has prepared the unaudited provisional condensed opening balance sheet from 1 May 2008. In addition Heineken has compiled unaudited, pro-forma condensed income (beia)[1] information for the whole of calendar year 2007 for the acquired S&N businesses. The adjustments have no effect on cash flows.
- It has refinanced in part its bank credit facilities related to the S&N acquisition through the raising of EUR 742 million of new long-term debt.
In addition, Heineken announced that it has changed the accounting treatment of joint ventures in the Group’s reporting from the proportional consolidation method to the equity method as from 1 January 2008. The comparative figures have been adjusted for this change.
Heineken will host an analyst and investor conference call in relation to these announcements today at 9:00am CET. The call will be audiocast live via the company website /webcast/investors, and will be available for download afterwards. Analysts and investors can call in using the follow telephone numbers:
The Netherlands The United Kingdom
Toll Free: 0800 - 265 8591 Toll Free: 0800 - 358 2280
Local line+31 (0)20 - 796 5332 Local line: + 44 (0) 20 8515 2301
Outcome of Heineken’s review of the acquired S&N businesses
Increase of S&N costs synergies by 30%
Heineken has substantially completed its review of the S&N businesses, which it acquired at the end of April 2008. The key results of the review are:
- Total expected pre-tax synergies over four years increase 21% to GBP 145 million before tax up from GBP 120 million, as a result of an increase in cost synergies to GBP 110 million (EUR 140 million). Based on its review Heineken is also confident that it will realise the expected revenue synergies of GBP 35 million (EUR 45 million).
- Restructuring costs related to the synergies are expected to total GBP 95 million before tax (EUR 120 million), mainly related to cash redundancy payments.
- Confirmation that the acquisition will be value enhancing by the fourth full year (2012). Due to declining consumer confidence and higher interest rates it is uncertain if the acquisition will be EPS (beia) accretive in 2009.
- On an annualised basis, EUR 60 million of synergies related to S&N have already been achieved by the end of August 2008 mainly as a result of:
- Integration of Heineken’s UK import organisation into S&N UK
- Integration of S&N’s import business in the USA into Heineken USA
- Closure of the Head Office of S&N
Opening balance sheet and pro forma income (beia) information S&N acquisition
Heineken has drawn up the unaudited provisional condensed opening balance sheet per 1 May 2008. Heineken has also compiled unaudited pro forma condensed income (beia) information for the full year 2007 as if Heineken had acquired the relevant S&N businesses as per 1 January 2007. This pro forma information is derived from S&N’s 2007 financial information and adjusted to reflect Heineken’s accounting policies, taking into account certain transactions related to the acquisition and using the purchasing accounting method for acquisitions. This method requires measuring assets and liabilities at fair market value per the balance sheet date of 1 May 2008 for the opening balance sheet.
The pro-forma condensed income (beia) information does not purport to represent what our actual result of operations would have been had the acquisition of the S&N acquired businesses actually occurred on 1 January 2007, nor are they necessarily indicative of future result of operations. The information is presented for information purposes only.
The adjustments are subject to revision once the provisional accounting has been finalised.
For the full press release, please download attachment. | 
