F-4/A 1 d529201df4a.htm AMENDMENT NO. 1 TO FORM F-4 Amendment No. 1 to Form F-4
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As filed with the Securities and Exchange Commission on July 8, 2013

Registration No. 333-189656

 

 

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Amendment No. 1

to

FORM F-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

AMBEV S.A.

(Exact Name of Registrant as Specified in Its Charter)

AMBEV INC.

(Translation of Registrant’s name into English)

The Federative Republic of Brazil

(State or Other Jurisdiction of Incorporation or Organization)

2080

(Primary Standard Industrial Classification Code Number)

Not Applicable

(I.R.S. Employer Identification Number)

Rua Dr. Renato Paes de Barros, 1017, 3rd floor

04530-001, São Paulo, SP, Brazil

+55 (11) 2122-1200

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)

 

 

Puglisi & Associates

850 Library Avenue Suite

P.O. Box 885

Newark, Delaware 19715

+1 (302) 738-6680

(Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service)

 

 

Copies to:

Kevin W. Kelley, Esq.

Gibson, Dunn & Crutcher LLP

200 Park Avenue

New York, New York 10166

+1 (212) 351-4000

 

 

Approximate date of commencement of proposed offer to the public: As soon as practicable after this registration statement becomes effective.

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933 (“Securities Act”), check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

 

Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)

   ¨

Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)

   ¨

 

 

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until this registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to Section 8(a), may determine.

 

 

 


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Ambev S.A.

Stock Swap Merger of Companhia de Bebidas das Américas – Ambev

with Ambev S.A.

The management of Companhia de Bebidas das Américas – Ambev, or Ambev, has proposed a corporate restructuring under Brazilian Law No. 6.404/76, as amended, or the Brazilian Corporation Law, comprised of a stock swap merger (incorporação de ações), or the Stock Swap Merger, of Ambev with Ambev S.A., or Newbev, the overall objective of which is to promote a recapitalization of Ambev, so that it may have a single-class share structure comprised exclusively of voting common shares. Pursuant to the Stock Swap Merger, all issued and outstanding common and preferred shares of Ambev not held by Newbev will be exchanged for new common shares, no par value, of Newbev. Upon completion of the Stock Swap Merger, Ambev will be a wholly-owned subsidiary of Newbev.

Pursuant to the Stock Swap Merger:

 

   

in exchange for their Ambev common or preferred shares, Ambev shareholders will receive, without any further action on their part, five new Newbev common shares for each Ambev common or preferred share they hold; and

 

   

in exchange for their American Depositary Shares, or ADSs, of Ambev, each representing one Ambev common or preferred share, Ambev ADS holders will receive five new Newbev ADSs, each representing one Newbev common share, for each Ambev common or preferred ADS they hold.

The Stock Swap Merger will require the approval of Ambev’s shareholders at a shareholders’ meeting of Ambev currently scheduled to be held on July 30, 2013, at 10:00 a.m. local time, or the Ambev EGM, at Ambev’s principal executive offices at Rua Dr. Renato Paes de Barros, 1017, 4th floor, São Paulo, SP, Brazil. Special voting procedures for minority shareholder protection will be adopted for the Ambev EGM to ensure that the transaction will be implemented only if a majority of the minority-held Ambev common and preferred shares present at the Ambev EGM, as separate classes and without the participation of our controlling shareholders, are each in favor of the transaction.

Persons who were holders of record of Ambev common shares continuously since December 7, 2012, the date of publication of the first press release on the Stock Swap Merger, until the relevant appraisal rights exercise date and who do not vote in favor of the Stock Swap Merger are entitled to appraisal rights as described in this prospectus. Holders of Ambev ADSs representing Ambev common shares must surrender their ADSs and withdraw the underlying common shares in Brazil if they intend to exercise appraisal rights. Holders of Ambev preferred shares (including those represented by ADSs) do not have appraisal rights under the Brazilian Corporation Law.

Based on the Stock Swap Merger’s exchange ratio and the number of Ambev common and preferred shares subject to exchange in the transaction on June 26, 2013, and assuming no exercise of appraisal rights, Newbev will issue 5,967,838,305 new common shares (including in the form of ADSs), of which 1,860,946,570, or 31.2%, have been registered pursuant to the registration statement of which this prospectus forms a part, as they will be issued in respect of Ambev shares underlying Ambev ADSs or held directly on the BM&FBOVESPA by U.S. residents, in each case as of that date.

The Ambev common and preferred shares are listed on the São Paulo Stock, Commodities and Futures Exchange (BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros), or the BM&FBOVESPA, and are also listed in the form of ADSs on the New York Stock Exchange, or the NYSE, and both Ambev and Newbev are foreign private issuers under U.S. securities laws. If the Stock Swap Merger is approved, the Newbev common shares and ADSs to be distributed in this transaction are expected to be approved for listing on the BM&FBOVESPA and the NYSE, respectively, on or about the date the transaction is consummated.

This prospectus has been prepared for holders of Ambev common and preferred shares who are residents of the United States or U.S. persons and for holders of Ambev ADSs to provide information about the Stock Swap Merger and the securities to be offered pursuant thereto. This information is available without charge to security holders upon written or oral request. See “Part Seven: Additional Information for Shareholders—Where You Can Find More Information.”

You should read this prospectus carefully. In particular, please read the section entitled “Risk Factors” beginning on page 50 for a discussion of risks that you should consider when evaluating the Stock Swap Merger.

Neither the U.S. Securities and Exchange Commission, or the SEC, nor any state securities commission has approved or disapproved of the securities to be issued in connection with the Stock Swap Merger or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

IF YOU HOLD COMMON OR PREFERRED SHARES OF AMBEV YOU ARE ENTITLED TO VOTE OR OTHERWISE HAVE A SAY ON THE STOCK SWAP MERGER. WHILE WE HAVE DESCRIBED IN THIS PROSPECTUS THE GENERAL PROCEDURES FOR VOTING YOUR AMBEV SHARES, YOU SHOULD CONSULT YOUR BRAZILIAN COUNSEL ON HOW TO COMPLY WITH THOSE PROCEDURES, AND WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US ONE. IF YOU ARE A HOLDER OF AMBEV ADSs, YOU WILL RECEIVE INSTRUCTIONS FROM THE DEPOSITARY FOR THE AMBEV ADS PROGRAMS ON HOW TO SUBMIT VOTING INSTRUCTIONS FOR YOUR SECURITIES.

This prospectus is dated July 8, 2013 and is expected to be first made available to holders of Ambev shares and ADSs on or about that date.


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TABLE OF CONTENTS

 

     Page  

CERTAIN DEFINED TERMS AND CONVENTIONS USED IN THIS PROSPECTUS

     v   

Trademarks

     v   

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

     vi   

PART ONE: QUESTIONS AND ANSWERS ABOUT THE STOCK SWAP MERGER

     1   

PART TWO: SUMMARY

     15   

The Companies

     15   

The Contribution

     18   

Terms of the Stock Swap Merger

     19   

Effects of the Stock Swap Merger

     20   

Purpose of and Reasons for the Stock Swap Merger

     21   

Considerations for Noncontrolling Shareholders

     22   

Approval of the Stock Swap Merger

     23   

Special Voting Procedures for Minority Shareholder Protection

     24   

The Ambev EGM

     25   

Appraisal Rights

     26   

Valuation Reports

     27   

Financial Advisors

     28   

Timetable for the Stock Swap Merger

     29   

Management

     29   

Stock Exchange Matters

     30   

Accounting Treatment of the Contribution and the Stock Swap Merger

     30   

Material Tax Considerations

     31   

Selected Historical and Pro Forma Financial Data

     31   

Historical and Pro Forma Share Information

     45   

Exchange Rates

     49   

PART THREE: RISK FACTORS

     50   

Risks Relating to the Stock Swap Merger

     50   

Risks Relating to the Newbev Common Shares and ADSs

     53   

Risks Relating to Our Operations, Risks Relating to Brazil and Other Countries Where We Operate and Risks Relating to the Ambev Shares and ADSs

     59   

PART FOUR: INFORMATION ON THE COMPANIES

     60   

Information on Newbev

     60   

Information on Ambev

     61   

PART FIVE: THE STOCK SWAP MERGER

     88   

Background to the Stock Swap Merger

     88   

Terms of the Stock Swap Merger

     89   

Effects of the Stock Swap Merger

     90   

Purpose of and Reasons for the Stock Swap Merger

     91   

Considerations for Noncontrolling Shareholders

     92   

Determination of the Stock Swap Merger Ratio

     93   

Principal Transaction Documents

     94   

 

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     Page  

Approvals for the Stock Swap Merger

     108   

Special Voting Procedures for Minority Shareholder Protection

     109   

The Ambev EGM

     110   

Receipt of Newbev Common Shares

     112   

Receipt of Newbev ADSs

     112   

Termination of Ambev ADS Programs

     113   

Brokerage Commissions and Depositary Fees

     114   

Stock Exchange Matters

     114   

Appraisal Rights

     114   

Unwinding the Stock Swap Merger

     116   

Financial Advisors

     117   

Mailing of Prospectus

     119   

Accounting Treatment of the Contribution and the Stock Swap Merger

     119   

Tax Considerations

     120   

Management

     138   

Interests of Certain Persons in the Stock Swap Merger

     146   

Past Contracts, Transactions, Negotiations and Agreements

     147   

Plans and Proposals

     149   

Expenses

     149   

PART SIX: SHAREHOLDER RIGHTS

     150   

General

     150   

Comparative Share and Dividend Information

     153   

Description of Newbev Capital Stock

     156   

Description of Newbev ADSs

     168   

Exchange Controls

     176   

PART SEVEN: ADDITIONAL INFORMATION FOR SHAREHOLDERS

     181   

Where You Can Find More Information

     181   

Enforceability of Civil Liabilities Under U.S. Securities Laws

     183   

PART EIGHT: LEGAL AND REGULATORY MATTERS

     184   

General

     184   

Legal Matters

     184   

Experts

     184   

PART NINE: FINANCIAL STATEMENTS AND RELATED FINANCIAL INFORMATION

     F-1   

Index to Financial Statements and Related Financial Information

     F-1   
ANNEX A: Annual Report on Form 20-F of Ambev for the year ended December 31, 2012, filed on April 30, 2013      A-1   
ANNEX B: Stock Swap Merger Agreement (Protocolo e Justificação de Incoporação de Ações) of Ambev with Newbev, dated May 10, 2013 (English-language translation)      B-1   
ANNEX C: Valuation Report of the Common and Preferred Shares of Ambev by Apsis Consultoria Empresarial Ltda., dated April 26, 2013 (included as Schedule I to Annex B) (English-language translation)      B-9   

 

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     Page  
ANNEX D: Valuation Report of the Market Value of Ambev’s and Newbev’s Net Equity by Apsis Consultoria Empresarial Ltda., dated June  19, 2013 (English-language translation)      D-1   
ANNEX E: Minutes of the Meeting of the Board of Directors of Ambev, dated May 10, 2013 (English-language translation)      E-1   
ANNEX F: Opinion of the Fiscal Council of Ambev, dated May 10, 2013 (English-language translation)      AF-1   

ANNEX G: Proposed Bylaws (Estatuto Social) of Newbev (English-language translation)

     G-1   

 

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We have filed with the SEC a registration statement on Form F-4 (Registration No. 333-189656) with respect to the securities Newbev is offering pursuant to the Stock Swap Merger. This prospectus, which forms a part of the registration statement, does not contain all the information included in the registration statement, including its exhibits and schedules. For further information about us and the securities described in this prospectus, you should refer to the registration statement and its exhibits and schedules. Statements made in this prospectus about certain contracts or other documents are not necessarily complete. When those statements are made, we refer you to the copies of the contracts or documents that are filed as exhibits to the registration statement, because those statements are qualified in all respects by reference to those exhibits. The registration statement, including the exhibits and schedules thereto, is on file at the office of the SEC and may be inspected without charge. Our SEC filings are also available to the public at the SEC website at www.sec.gov.

You may also obtain this information without charge by writing or telephoning us, care of Ambev, at the following address and telephone number: Rua Dr. Renato Paes de Barros, 1017, 4th floor, 04530-001, São Paulo, SP, Brazil, +55 (11) 2122-1200. To obtain timely delivery, you must request this information no later than five business days before the date of the Ambev EGM. Therefore, you must request this information no later than July 23, 2013.

You should rely only on the information contained in this prospectus. Neither Ambev nor Newbev has authorized any person to provide you with any information or to make any representations in connection with the Stock Swap Merger, other than the information contained in this prospectus. If any person provides you with other information or makes a representation in connection with the Stock Swap Merger, that information or representation must not be relied on as having been authorized by us.

This prospectus does not constitute an offer to any person in any jurisdiction in which an offer is unlawful. Offers are not being made to holders of Ambev shares in any jurisdiction in which the making or acceptance of the offer would not be in compliance with the laws of that jurisdiction. However, Newbev may, in its sole discretion, take any action it may deem necessary to make offers in any such jurisdiction and extend those offers to holders of Ambev shares in any jurisdiction. In any jurisdiction where the securities, blue sky or other laws require that offers be made by a licensed broker or dealer, offers to holders of Ambev shares will be deemed to be made on Newbev’s behalf by one or more registered brokers or dealers licensed under the laws of the relevant jurisdiction.

The information contained in this prospectus speaks only as of the date of this prospectus unless the information specifically indicates that another date applies. The delivery of this prospectus will not, under any circumstance, create an implication that the affairs of Ambev or Newbev have not changed since the date as of which information is furnished or since the date of this prospectus.

We are not incorporating the contents of the websites of Ambev or the SEC or of any other entity into this document. References to websites are made in this document for your convenience only to provide you with information on how you can obtain at those websites copies of the documents that are included as exhibits to the registration statement of which this prospectus forms a part.

 

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CERTAIN DEFINED TERMS AND CONVENTIONS USED IN THIS PROSPECTUS

In this prospectus, references to “we,” “us” and “our” are collectively to Newbev, Ambev and Ambev’s consolidated subsidiaries, unless the context requires that those terms be interpreted as references to Newbev only. All references to the “real,” “reais” or “R$” are to the Brazilian real, the official currency of Brazil. All references to “U.S. dollars,” “dollars” or “US$” are to the official currency of the United States. All references to “Canadian dollars” or “C$” are to the official currency of Canada. All references to “Brazil” are to the Federative Republic of Brazil. All references to percent ownership interests in Ambev do not take into account treasury shares.

Trademarks

This prospectus includes the names of our products which constitute trademarks or trade names which we own or which are owned by others and are licensed to us for our use. This prospectus also contains other brand names, trade names, trademarks or service marks of other companies, and these brand names, trade names, trademarks or service marks are the property of those other companies.

 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Some of the information contained in this prospectus may constitute forward-looking statements. Forward-looking statements about Ambev included in this prospectus (including in Ambev’s Annual Report on Form 20-F for the year ended December 31, 2012, or the 2012 Ambev 20-F, included as Annex A to this prospectus) have been made based on information furnished by Ambev, and only those forward-looking statements come within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the U.S. Securities Exchange Act of 1934, as amended, or the Exchange Act. We have based all forward-looking statements contained in this prospectus largely on our current expectations and projections about future events, industry and financial trends affecting our business.

Many of these forward-looking statements can be identified by the use of forward-looking words such as “anticipate,” “project,” “may,” “believe,” “could,” “expect,” “should,” “plan,” “intend,” “estimate,” “potential,” among others. These statements appear in a number of places in this prospectus and include, but are not limited to, statements regarding our intent, belief or current expectations. Forward-looking statements are subject to certain risks and uncertainties that are outside our control and are difficult to predict. These risks and uncertainties could cause actual results to differ materially from those suggested by forward-looking statements. Factors that could cause actual results to differ materially from those contemplated by forward-looking statements include, among others:

 

   

greater than expected costs (including taxes) and expenses;

 

   

the risk of unexpected consequences resulting from acquisitions, joint ventures, strategic alliances or divestiture plans, and our ability to successfully integrate the operations of businesses or other assets that we acquire;

 

   

the risk of unexpected consequences resulting from corporate restructurings, including the Stock Swap Merger, and our ability to successfully and cost-effectively implement them and capture their intended benefits;

 

   

our expectations with respect to expansion, projected asset divestitures, premium growth, accretion to reported earnings, working capital improvements and investment income or cash flow projections;

 

   

lower than expected revenue;

 

   

greater than expected customer losses and business disruptions;

 

   

limitations on our ability to contain costs and expenses;

 

   

local, regional, national and international economic conditions, including the risks of a global recession or a recession in one or more of our key markets, and the impact they may have on us and our customers and our assessment of that impact;

 

   

the monetary and interest rate policies of central banks;

 

   

continued availability of financing;

 

   

market risks, such as interest rate risk, foreign exchange rate risk, commodity risk, asset price risk, equity market risk, inflation or deflation;

 

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our ability to continue to introduce competitive new products and services on a timely, cost-effective basis;

 

   

the effects of competition and consolidation in the markets in which we operate, which may be influenced by regulation, deregulation or enforcement policies;

 

   

changes in pricing environments and volatility in commodity prices;

 

   

regional or general changes in asset valuations;

 

   

changes in consumer spending;

 

   

the outcome of pending and future litigation and governmental proceedings;

 

   

changes in government policies;

 

   

changes in applicable laws, regulations and taxes in jurisdictions in which we operate including the laws and regulations governing our operations, as well as actions or decisions of courts and regulators;

 

   

natural and other disasters;

 

   

any inability to economically hedge certain risks;

 

   

inadequate impairment provisions and loss reserves;

 

   

technological changes;

 

   

our success in managing the risks involved in the foregoing;

 

   

governmental intervention, resulting in changes to the economic, tax or regulatory environment in Brazil or other countries in which we operate;

 

   

the declaration or payment of dividends;

 

   

the utilization of Ambev’s subsidiaries’ income tax loss carry forwards; and

 

   

other factors or trends affecting our financial condition or results of operations, including those factors identified or discussed under “Risk Factors,” including the risk factors contained in the 2012 Ambev 20-F.

We caution you that forward-looking statements are not guarantees of future performance and involve risks and uncertainties. Forward-looking statements reflect only our current expectations and are based on our management’s beliefs and assumptions and on information currently available to our management. Actual results may differ materially from those in forward-looking statements as a result of various factors, including, without limitation, those identified in the section entitled “Risk Factors” in this prospectus. As a result, investors are cautioned not to place undue reliance on forward-looking statements contained in this prospectus when making an investment decision.

Forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update them in light of new information or future developments or to release publicly any revisions to these statements in order to reflect later events or circumstances or to reflect the occurrence of unanticipated events.

Investors should consider these cautionary statements together with any written or oral forward-looking statements that we may issue in the future.

 

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PART ONE: QUESTIONS AND ANSWERS ABOUT THE STOCK SWAP MERGER

The following are some questions that you may have regarding the Stock Swap Merger and brief answers to those questions. We urge you to read carefully the remainder of this document because the information in this section does not provide all the information that might be important to you with respect to the Stock Swap Merger.

 

Q: Why am I receiving this prospectus?

 

A: The management of Ambev has proposed a corporate restructuring comprised of a stock swap merger (incorporação de ações) under the Brazilian Corporation Law of Ambev with Newbev. This document is a prospectus of Newbev relating to the new common shares of Newbev that will be issued (in some cases in the form of American Depositary Shares, or ADSs, each of which will represent one Newbev common share) in connection with the Stock Swap Merger, if approved by the required vote of Ambev’s shareholders gathered at the Ambev EGM.

 

   If you hold any Ambev common or preferred shares (including in the form of ADSs), you are receiving this prospectus because Newbev may be deemed to be offering you securities (i.e., the Newbev common shares and ADSs) for purposes of the Securities Act. In addition, you are receiving this prospectus to provide you with information about the Stock Swap Merger and the matters that will be considered at the Ambev EGM, as well as with instructions on how you may exercise your voting and other shareholder rights relating to the Stock Swap Merger and the Ambev EGM.

 

Q: What is the Stock Swap Merger?

 

A: The Stock Swap Merger is a business combination of Ambev with Newbev under the Brazilian Corporation Law, the overall objective of which is to promote a recapitalization of Ambev, so that we may have a single-class share structure comprised exclusively of voting common shares. The Stock Swap Merger will be accomplished through an exchange of newly issued Newbev common shares (in some cases in the form of ADSs) for all the issued and outstanding Ambev shares (in some cases in the form of ADSs) not held by Newbev, provided the transaction is approved by the required shareholder vote.

 

   If the Stock Swap Merger is approved, (1) Ambev shareholders will receive five new Newbev common shares in exchange for each Ambev common or preferred share they hold and (2) holders of Ambev ADSs will receive five new Newbev ADSs, each representing one Newbev common share, in exchange for each Ambev common or preferred ADS they hold.

 

   Upon completion of the Stock Swap Merger, Ambev will be a wholly-owned subsidiary of Newbev.

 

Q: What are the reasons for the Stock Swap Merger?

 

A:

We believe that the Stock Swap Merger may promote several benefits for us and our shareholders, including a resulting company with improved trading liquidity, enhanced corporate governance standards and increased flexibility for management of our capital structure (for a

 

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  description of how the Stock Swap Merger may help achieve these benefits, see “Part Five: The Stock Swap Merger—Purpose of and Reasons for the Stock Swap Merger”). We believe that these potential benefits will be derived as a result of a number of factors, including:

 

   

the conversion of Ambev’s dual-class share structure into a single-class share structure;

 

   

the availability to all our shareholders of certain shareholder rights under the Brazilian Corporation Law that are only provided by common shares; and

 

   

certain corporate governance advances that will be present in Newbev’s bylaws and that are not contemplated in Ambev’s bylaws.

 

Q: Are there any other planned corporate transactions involving Ambev or Newbev that are intended to take place proximately with the Stock Swap Merger?

 

A: Yes. As a preliminary step to the Stock Swap Merger, on June 17, 2013 our ultimate controlling shareholder, Anheuser-Busch InBev N.V./S.A., or ABI, contributed to Newbev all the Ambev shares that ABI previously held indirectly in Ambev through two other holding companies, or the Contribution. As a result of the Contribution, Newbev became the direct holder of 74.0% and 46.3% of the Ambev common shares and preferred shares, respectively, and accordingly Ambev’s direct controlling shareholder. This transaction has no dilutive effect to Ambev’s shareholders, including its noncontrolling shareholders.

 

   After the Stock Swap Merger is consummated, at which time Ambev will have become a wholly-owned subsidiary of Newbev, it is expected that an upstream merger of Ambev and certain of its wholly-owned subsidiaries with and into Newbev will be executed at some point in the second half of 2013 or the first quarter of 2014. This transaction will have no impact on the shareholdings that Newbev’s then shareholders will hold in this company. As a consequence of this upstream merger, our corporate structure will be simplified, resulting in expected reductions to our administrative expenses, and it will be possible to use goodwill currently existing at the Newbev level to be applied against any taxable income generated by our operating activities.

 

Q: How will my shareholder rights as a holder of Ambev common shares or Ambev common ADSs change after the Stock Swap Merger?

 

A: As a holder of Ambev common shares or Ambev common ADSs, the shareholder rights conferred to you by the Newbev common shares (including in the form of ADSs) to be issued to you upon consummation of the Stock Swap Merger will be substantially identical to the shareholder rights that the Ambev common shares (including in the form of Ambev common ADSs) currently confer to you. See “Will the bylaws of Newbev following the Stock Swap Merger be substantially identical to Ambev’s current bylaws?” below.

 

Q: How will my shareholder rights as a holder of Ambev preferred shares or Ambev preferred ADSs change after the Stock Swap Merger?

 

A:

As a holder of Ambev preferred shares (including in the form of ADSs), the Newbev common shares (including in the form of ADSs) to be issued to you upon consummation of the Stock Swap Merger will provide you with certain rights that are currently unavailable to you as a holder

 

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  of Ambev preferred shares or Ambev preferred ADSs, including (1) full voting rights, (2) the right to be included in a mandatory change of control tender offer under the Brazilian Corporation Law that ensures that holders of common shares be offered 80% of the price per share paid to a selling controlling shareholder in the event of a disposition of Newbev’s control, and (3) the right to participate in a voting block representing at least 10% of the Newbev common shares to elect one member and respective alternate to our Fiscal Council without the participation of the controlling shareholders.

 

   However, as a holder of Ambev preferred shares (including in the form of ADSs), you will lose the following shareholder rights conferred to you by those shares when you surrender them in the Stock Swap Merger in exchange for new Newbev common shares (including in the form of ADSs): (1) enhanced dividend distribution rights requiring that dividends paid in respect of the Ambev preferred shares be 10% greater than those payable in respect of the Ambev common shares, (2) priority in capital reimbursement relative to the Ambev common shares upon a liquidation of Ambev, and (3) the right to elect one member and respective alternate to our Fiscal Council by means of a separate class vote of preferred shareholders.

 

Q: Will the bylaws of Newbev following the Stock Swap Merger be substantially identical to Ambev’s current bylaws?

 

A: Yes, except for the following corporate governance enhancements that are not available to the Ambev shareholders under Ambev’s bylaws: (1) Newbev’s minimum mandatory dividend according to the bylaws of this company will be 40% of adjusted net income, as compared to 35% for Ambev, and (2) Newbev’s bylaws will require that the Board of Directors of this company include two independent members, as compared to no similar bylaw requirement for Ambev’s Board of Directors.

 

Q: After the consummation of the Contribution and the Stock Swap Merger, will I own the same equity ownership in Newbev that I own in Ambev prior to the approval of these transactions?

 

A: Yes. Your equity ownership in Newbev following the consummation of all the corporate transactions described in this prospectus will be the same as your equity ownership in Ambev prior to any of those transactions. Therefore, no premium was ascribed to the Ambev shares indirectly held by ABI and representing a direct controlling interest in us that were contributed to Newbev in the Contribution.

 

Q: How was the ratio to exchange five new Newbev common shares for each and every Ambev common or preferred share in the Stock Swap Merger calculated?

 

A: The exchange ratio of five new Newbev common shares for each and every Ambev common or preferred share is being proposed to reduce the nominal trading price of Ambev’s equity securities, as if Ambev had implemented a stock-split, with a view to helping increase their trading liquidity. This exchange ratio will be applied uniformly to both the Ambev common and preferred shares to ensure that the equity ownership held in us by our shareholders be the same immediately after the transactions described in this prospectus as they were immediately prior to those transactions.

 

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Q: How was the ratio to exchange Ambev ADSs for Newbev ADSs in the Stock Swap Merger calculated?

 

A: Because a same ratio is being adopted uniformly for the exchange of both the Ambev common and preferred shares for new Newbev common shares, and because the ADSs of both Ambev and Newbev each represent one underlying share, the ratio to exchange Ambev ADSs for new Newbev ADSs will be also five new Newbev ADSs for each and every Ambev common or preferred ADS.

 

Q: Is any Ambev shareholder entitled to exchange their Ambev shares for Newbev common shares pursuant to a different exchange ratio than the exchange ratio approved for the Stock Swap Merger?

 

A: No. The same exchange ratio of five new Newbev common shares for each and every Ambev common or preferred share will be applicable to all Ambev shareholders pursuant to the terms of the Stock Swap Merger, if approved.

 

Q: Is any Ambev shareholder entitled to receive merger consideration other than Newbev common shares in connection with the Stock Swap Merger?

 

A: No. All Ambev shareholders will receive the same form of merger consideration (i.e., Newbev common shares) in the Stock Swap Merger, if approved.

 

Q: Have ABI’s holding companies received any consideration other than Newbev common shares in connection with the Contribution?

 

A: No. ABI’s holding companies received only Newbev common shares in consideration for their contribution of Ambev shares to Newbev pursuant to the Contribution.

 

Q: Will shareholders of Ambev having some affiliation with Newbev receive different treatment in the Stock Swap Merger than unaffiliated holders?

 

A: No.

 

Q: Have any management or other corporate bodies of Ambev recommended or voted in favor of the Stock Swap Merger?

 

A: Yes. At a Board meeting held on May 10, 2013, two of the ten members of Ambev’s Board of Directors voted unanimously and without reservation to approve its terms and conditions, as set forth in a Protocol and Justification of Stock Swap Merger under the Brazilian Corporation Law (Protocolo e Justificação de Incorporação de Ações), or the Stock Swap Merger Agreement, which outlines the main terms and conditions of, and reasons for, the transaction pursuant to an itemized list of requirements under the Brazilian Corporation Law. The remaining directors abstained from voting on the order of the day regarding the terms and conditions of the Stock Swap Merger, as it was determined that their interests with respect to the transaction could potentially conflict with those of the company.

 

   In addition, at a meeting held on May 10, 2013, Ambev’s Fiscal Council opined unanimously and without reservation that the Stock Swap Merger, pursuant to the terms set forth in the Stock Swap Merger Agreement, be approved by Ambev’s shareholders at the Ambev EGM.

 

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Q: Has any financial or legal advisor retained in connection with the Stock Swap Merger submitted any reports or made any recommendation on the merits of the transaction?

 

A: No.

 

Q: Under the Brazilian Corporation Law, what corporate approvals of Ambev are required for the Stock Swap Merger to be approved?

 

A: Under the Brazilian Corporation Law, an affirmative vote of holders representing at least half of the issued and outstanding Ambev common shares is required to approve the Stock Swap Merger.

 

   As a result of the Contribution, Newbev became the direct holder of 74.0% of the Ambev common shares, which at the time of the Ambev EGM will form a 91.1% aggregate interest in the Ambev common shares when considered together with the 17.1% interest in those shares that are currently held by Fundação Antonio e Helena Zerrenner Instituição Nacional de Beneficência, or FAHZ, the other party to the shareholders’ agreement that governs the control power over Ambev’s corporate affairs, or the Ambev Shareholders’ Agreement. However, neither Newbev nor FAHZ will vote their Ambev common shares to approve the Stock Swap Merger, unless a majority of the minority-held Ambev common and preferred shares present at the Ambev EGM, as separate classes and without the participation of our controlling shareholders, are each in favor of the transaction pursuant to the special voting procedures for minority shareholder protection that will be adopted for that shareholders’ meeting. If the majority of those minority-held Ambev common and preferred shares, as separate classes and without the participation of our controlling shareholders, are each in favor of the Stock Swap Merger, Newbev and FAHZ will vote their Ambev common shares in favor of the transaction only so that the deliberation to approve it complies with applicable minimum quorum requirements under the Brazilian Corporation Law. If the majority of the minority-held shares in either of those share classes are not in favor of the transaction, Newbev and FAHZ will either vote their Ambev common shares against it or abstain from voting, in order to uphold the opinion on the Stock Swap Merger that the majority of the minority-held Ambev common and preferred shares shall express, as separate classes and without the participation of our controlling shareholders, at the Ambev EGM.

 

   See “Will special voting procedures for minority shareholder protection be adopted for the Ambev EGM to ensure that the Stock Swap Merger will be implemented only if both the minority holders of the Ambev common and preferred shares, as separate classes and without the participation of our controlling shareholders, are each in favor of the transaction?” below.

 

Q: Are there any approvals, whether corporate, governmental or from other third parties, required for the consummation of the Stock Swap Merger other than the Ambev corporate approvals?

 

A: Other than the approval of the transaction by Newbev’s shareholders at a shareholders’ meeting of Newbev (which approval is expected to be obtained since ABI beneficially owns all of Newbev’s shares), there are no other approvals, corporate, governmental or otherwise, required for the consummation of the Stock Swap Merger.

 

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Q: Will special voting procedures for minority shareholder protection be adopted for the Ambev EGM to ensure that the Stock Swap Merger will be implemented only if both the minority holders of the Ambev common and preferred shares, as separate classes and without the participation of our controlling shareholders, are each in favor of the transaction?

 

A: Yes. Under the Brazilian Corporation Law, preferred shares do not have voting rights in connection with mergers and corporate restructurings in general. However, at the Ambev EGM minority holders of Ambev preferred shares will be asked in an exclusive poll of preferred shareholders if they are against the Stock Swap Merger. If a majority of the minority-held Ambev preferred shares participating in the preferred shareholders’ poll is against the Stock Swap Merger, then Newbev and FAHZ will vote their Ambev common shares against the transaction and, consequently, it will not be approved.

 

   If a majority of the minority-held Ambev preferred shares participating in the preferred shareholders’ poll is not against the Stock Swap Merger, then the transaction will be submitted to a vote of minority holders of Ambev common shares (including in the form of ADSs). At that point, if a majority of the minority-held Ambev common shares present and voting at the Ambev EGM votes against the Stock Swap Merger, then the transaction will not be approved.

 

   None of ABI, FAHZ or their respective affiliates, including members of their respective management bodies or of any of their respective affiliates, or the Affiliated Holders, will use the Ambev preferred or common shares beneficially owned by them to vote in favor or against the Stock Swap Merger in the preferred shareholders’ poll or the minority common shareholder vote on the transaction. In addition, none of their Ambev shares will be included in the quorum of shares eligible to participate in the preferred shareholders’ poll or the minority common shareholder vote on the Stock Swap Merger.

 

   Further, abstentions will not be counted as votes for or against the Stock Swap Merger at the preferred shareholders’ poll or the minority common shareholder vote on the Stock Swap Merger or on any other matter subject to deliberation at the Ambev EGM. They will also not be counted in the quorum of shares eligible to participate in the preferred shareholders’ poll or the minority common shareholder vote on the Stock Swap Merger.

 

   Therefore, the Stock Swap Merger will only be approved if a majority of the minority-held Ambev common shares present and voting at the Ambev EGM votes in favor of the transaction, provided that it has not been rejected by a majority of the minority-held Ambev preferred shares participating in the preferred shareholders’ poll. Only in such a case will Newbev and FAHZ vote their Ambev common shares to approve the Stock Swap Merger, and they will do so only to ensure that the deliberation to approve the transaction complies with applicable minimum quorum requirements under the Brazilian Corporation Law.

 

Q: Will Ambev use the discretionary proxy under the deposit agreements of its ADS programs to vote at the Ambev EGM any shares underlying Ambev ADSs as to which ADS holders have not provided voting instructions to the depositaries of those programs?

 

A: No.

 

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Q: When and where will the Ambev EGM be held?

 

A: The Ambev EGM will be held on July 30, 2013, at 10:00 a.m. local time, at Ambev’s principal executive offices at Rua Dr. Renato Paes de Barros, 1017, 4th floor, São Paulo, SP, Brazil.

 

Q: What is the record date for the Ambev EGM?

 

A: Only the Ambev ADS holders of record as of the close of business, local time, on July 1, 2013 will be entitled to instruct The Bank of New York Mellon, as depositary for the ADS programs of Ambev and Newbev, or the Depositary, as to how to vote the Ambev shares underlying their Ambev ADSs at the Ambev EGM. In accordance with the Brazilian Corporation Law, there is no record date for Ambev shareholders who hold their Ambev shares directly. Those Ambev shareholders who are listed on the share registry of Ambev on the date of the meeting will be entitled to attend and vote at the Ambev EGM (see “As a holder of Ambev common or preferred shares, how do I vote?” below).

 

Q: How will a quorum be established to open the Ambev EGM?

 

A: A quorum comprised of at least two -thirds of the issued and outstanding common shares of Ambev is necessary to open the Ambev EGM. Because as a result of the Contribution Newbev became the direct holder of 74.0% of the Ambev common shares, the presence of Newbev at the Ambev EGM will be sufficient to establish a quorum to open the meeting. For corporate approval requirements under the Brazilian Corporation Law, see “Under the Brazilian Corporation Law, what corporate approvals of Ambev are required for the Stock Swap Merger to be approved?” above.

 

Q: As a holder of Ambev common or preferred shares, do I have to attend the Ambev EGM to vote?

 

A: Yes. In order to vote, Ambev’s shareholders must attend the Ambev EGM in person or by proxy.

 

Q: As a holder of Ambev common or preferred shares, how do I vote?

 

A:

If you hold Ambev common or preferred shares, you may attend the Ambev EGM and vote your Ambev common shares or use your Ambev preferred shares to participate in the preferred shareholder’ poll concerning the Stock Swap Merger. Under the Brazilian Corporation Law, to vote shares at any shareholders’ meeting of a Brazilian corporation, you must either appear at the meeting in person and vote your shares or grant an appropriate power of attorney either to another shareholder of the company or a Brazilian attorney, each of whom will appear at the meeting and vote your shares on your behalf. Any such powers of attorney must have been issued, at most, one year prior to the shareholders’ meeting and must be certified by a notary public and, if executed outside Brazil, consularized by the Brazilian consulate located in the domicile of the grantor. A shareholder that is a legal entity shall be represented at a shareholders’ meeting by its duly appointed legal representatives. Powers of attorney granted by Ambev shareholders for their representation at the Ambev EGM must be deposited at Ambev’s principal executive offices at Rua Dr. Renato Paes de Barros, 1017, 4th floor, 04530-001, São Paulo, SP, Brazil, preferably at least three business days prior to the Ambev EGM. Powers of attorney observing the same formalities described above will also be required for

 

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  any proxies that Ambev’s preferred shareholders may wish to appoint to attend and participate on their behalf at the Ambev EGM and in the preferred shareholders’ poll concerning the Stock Swap Merger.

 

   We urge Ambev shareholders to consult Brazilian counsel when preparing any such powers of attorney (or related revocation instruments) to ensure that they comply with basic Brazilian legal requirements, as Ambev cannot, and will not, accept any forms that do not comply with those requirements.

 

   Holders of Ambev shares wishing to attend the Ambev EGM and who hold shares through the Fungible Custody of Registered Shares of Brazilian Stock Exchanges must provide a statement containing their corresponding equity interest in Ambev dated within 48 hours of the Ambev EGM.

 

   If you are a direct holder of Ambev shares, none of Newbev, Ambev, any of their affiliates or any members of their respective boards of directors or the boards of directors of those affiliates is soliciting any proxy from you or requesting that you send a proxy or its equivalent to any of them. The foregoing discussion of the procedures for voting your Ambev shares at the Ambev EGM has been provided for your convenience only. We urge you to consult Brazilian counsel with any questions on your voting rights and related procedures for the Ambev EGM.

 

Q: As a holder of Ambev common or preferred shares, what will be the consequences if I do not attend the Ambev EGM in person or by proxy or do not submit a proper power of attorney or documentation evidencing my equity interest in Ambev?

 

A: If you do not attend the Ambev EGM in person or by proxy or submit a proper power of attorney or documentation evidencing your equity interest in Ambev, your Ambev shares will neither be voted nor counted to establish a quorum to open the Ambev EGM.

 

Q: May holders of Ambev ADSs attend the Ambev EGM to vote?

 

A: No. Ambev ADS holders are not entitled to attend the Ambev EGM. Instead, those Ambev ADS holders that provide clear and timely instructions to the Depositary as to how to vote the Ambev shares underlying their Ambev ADSs will be represented at the Ambev EGM by the Depositary, which will vote those shares as instructed by those holders. See “As a holder of Ambev ADSs, how do I vote?” below.

 

Q: As a holder of Ambev ADSs, how do I vote?

 

A: As a holder of Ambev ADSs, you will receive in the mail information from the Depositary relating to your vote. In accordance with such information, you should provide the Depositary with clear voting instructions by no later than the applicable cut-off date for receipt of voting instructions by the Depositary to allow the Depositary sufficient time to record your instructions and vote the Ambev shares underlying your Ambev ADSs in accordance with your instructions.

 

Q: As a holder of Ambev ADSs, what will be the consequences if I do not provide the Depositary with voting instructions?

 

A: If you do not provide the Depositary with voting instructions, the Ambev shares underlying your Ambev ADS will neither be voted nor counted to establish a quorum to open the Ambev EGM.

 

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Q. What will happen to Ambev and Newbev if the Stock Swap Merger is approved?

 

A: After the Stock Swap Merger, the common and preferred shares of Ambev are expected to be deregistered under the Exchange Act, and Ambev will no longer file annual reports on Form 20-F or furnish reports on Form 6-K to the SEC. In addition, the Ambev common and preferred ADSs will be delisted from the NYSE, the Ambev common and preferred shares will be delisted from the BM&FBOVESPA and Ambev will be deregistered with the Brazilian Securities Commission (Comissão de Valores Mobiliários), or the CVM.

 

   As part of this corporate restructuring, Newbev will become subject to the reporting requirements of the Exchange Act, the Brazilian Corporation Law and the rules of the CVM and, consequently, it shall file annual reports on Form 20-F and furnish to the SEC on Form 6-K the reports that it may file in Brazil with the CVM or the BM&FBOVESPA. In addition, Newbev will (1) elect new executive officers in lieu of its current executive officers, (2) elect a new Board of Directors, and (3) adopt a stock option plan and code of ethics that are expected to be substantially similar to those of Ambev.

 

Q: What will happen to my Ambev shares if the Stock Swap Merger is approved?

 

A: As a holder of Ambev shares, for each Ambev common or preferred share that you hold, you will receive in exchange five new Newbev common shares.

 

Q: What will happen to my Ambev ADSs if the Stock Swap Merger is approved?

 

A: As a holder of Ambev ADSs, for each Ambev common or preferred ADS that you hold, you will receive in exchange five new Newbev ADSs, each of which will represent one Newbev common share, and your Ambev ADSs will be cancelled.

 

Q: When will the Stock Swap Merger be completed?

 

A: Following its approval by Ambev’s shareholders at the Ambev EGM and by Newbev’s shareholders at a shareholders’ meeting of Newbev, both of which are scheduled to take place on July 30, 2013, the Stock Swap Merger will be legally effective upon the release by Ambev of an announcement that its management will not propose a new extraordinary general shareholders’ meeting of the company to consider unwinding the transaction due to an excessive exercise of appraisal rights. See “Could the Stock Swap Merger be unwound?” below.

 

Q: When will I receive my Newbev common shares?

 

A: Assuming the Stock Swap Merger is approved, Newbev common shares to be issued in the Stock Swap Merger in respect of the Ambev shares will be delivered as soon as practicable after the end of the period for exercise of appraisal rights. Such period will end 30 days after the publication of the minutes of the Ambev EGM. Until the new Newbev common shares are distributed, the common and preferred shares of Ambev are expected to continue to trade on the BM&FBOVESPA under their existing ticker symbols.

 

Q: When will I receive my Newbev ADSs?

 

A:

The Newbev ADSs to be issued in the Stock Swap Merger in respect of the Ambev ADSs will be made available as soon as practicable after the related Newbev common shares are deposited

 

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  with Banco Bradesco S.A., the custodian in Brazil for the Depositary. This deposit is expected to occur as promptly as practicable after the expiration of the 30-day appraisal rights exercise period. Upon receipt of your Newbev ADSs, you will be able, if you so desire, to surrender your new Newbev ADSs for cancellation and withdraw in Brazil the respective Newbev common shares underlying those ADSs in the same manner as you are currently able to do so in connection with your Ambev ADSs. Until the new Newbev ADS are distributed, the Ambev common and preferred ADSs are expected to continue to trade on the NYSE under their existing ticker symbols.

 

Q: As a holder of Ambev common or preferred shares, what should I do to receive the Newbev common shares that will be distributed in respect of my Ambev shares if the Stock Swap Merger is approved?

 

A: As a holder of Ambev common or preferred shares, you will not need to do anything to receive your Newbev common shares to be distributed as a result of the Stock Swap Merger, if approved. Upon consummation of the Stock Swap Merger, all of the Ambev common and preferred shares not held by Newbev will automatically be exchanged for new Newbev common shares.

 

Q: As a holder of Ambev ADSs, what should I do to receive the Newbev ADSs that will be distributed in respect of my Ambev ADSs if the Stock Swap Merger is approved?

 

A: If you hold Ambev ADSs through a broker or other financial intermediary, no further action by you is required if the Stock Swap Merger is approved. The Newbev ADSs will automatically be credited to your account as promptly as practicable after the end of the appraisal rights exercise period that ends 30 days after the publication of the minutes of the Ambev EGM.

 

   However, if you are a registered holder of Ambev ADSs, to receive your Newbev ADSs you must sign and return to the Depositary a letter of transmittal, in accordance with instructions that will be provided to you by the Depositary, together with your American Depositary Receipts, or ADRs, of Ambev, if any, that evidence your Ambev ADSs. Upon receipt by the Depositary of the signed letter of transmittal and your ADRs, if any, and your compliance with the procedures described in the letter of transmittal, the Depositary will register in your name the Newbev ADSs in uncertificated form and send you a confirmation of that registration.

 

Q: What if I do not surrender my Ambev ADSs or do nothing?

 

A: The Depositary will hold the Newbev ADSs (or sale proceeds of those ADSs, as applicable) that you are entitled to receive until (1) you duly surrender your Ambev ADSs to the Depositary or (2) the escheatment of your Newbev ADSs (or sale proceeds of those ADSs, as applicable), whichever occurs first. In the event of termination of the Ambev ADS programs, the Depositary will, after notice to holders of any outstanding Ambev ADSs and upon expiration of the applicable post-termination holding period, sell the Newbev ADSs held in respect of any such outstanding Ambev ADSs. If you surrender your Ambev ADSs to the Depositary after such sale, the Depositary will remit to you the cash proceeds from the sale of the Newbev ADSs in respect of your Ambev ADSs (after deduction of applicable fees, taxes and expenses). Upon escheatment, the Depositary will deliver to the applicable state governments any property held at that time in respect of Ambev ADSs not previously surrendered.

 

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Q: If I hold Ambev ADSs, will I have to pay ADS cancellation or issuance fees?

 

A: If you hold Ambev ADSs, you will not have to pay fees for the cancellation of the Ambev ADSs that you will surrender as a result of the Stock Swap Merger. However, you will have to pay the Depositary an ADS issuance fee of US$0.025 for each new Newbev ADS issued to you in exchange for your cancelled Ambev ADSs.

 

Q: If I hold Ambev shares, will I have to pay brokerage commissions?

 

A: If your Ambev shares are registered in your name, you will not have to pay brokerage commissions. If your Ambev shares are held through a bank, broker or a custodian linked to a stock exchange, you should consult with them as to whether it will charge any transaction fees or service charges in connection with the Stock Swap Merger.

 

Q: Will the Newbev common shares and ADSs be listed?

 

A: Newbev will apply to list its common shares on the BM&FBOVESPA and its ADSs on the NYSE, and expects that those securities will be listed and admitted to trading on those stock exchanges on or about the date the Stock Swap Merger is consummated.

 

Q: Do I have appraisal rights?

 

A: Under the Brazilian Corporation Law, holders of Ambev preferred shares (including in the form of ADSs) are not entitled to appraisal rights in connection with the Stock Swap Merger, because those shares meet certain liquidity and dispersion criteria under the Brazilian Corporation Law that exempts Ambev from extending appraisal rights to dissenting preferred shareholders of the transaction.

 

   Persons who were holders of record of Ambev common shares continuously since December 7, 2012, the date of publication of the first press release on the Stock Swap Merger, until the relevant appraisal rights exercise date and who do not vote in favor of the Stock Swap Merger are entitled to exercise appraisal rights in connection with this transaction until the expiration of a period that ends 30 days after the publication of the minutes of the Ambev EGM. If holders of Ambev common shares exercise this right, they will receive from Ambev a cash amount for their Ambev common shares equal to R$9.231 per Ambev common share, calculated in accordance with the Brazilian Corporation Law as the book value per share of Ambev’s shareholders’ equity as set forth in Ambev’s balance sheet as of December 31, 2012. You may not exercise appraisal rights if you vote in favor of the Stock Swap Merger.

 

Q: As a holder of Ambev common shares, how do I exercise appraisal rights?

 

A: As a holder of Ambev common shares, if you meet the requirements to exercise appraisal rights, you may submit your request to any of Banco Bradesco S.A., in its capacity as registrar of the share registry of Ambev, the custodian of your Ambev common shares or Ambev. Your request to exercise appraisal rights must be submitted within 30 days of the publication of the minutes of the Ambev EGM or otherwise your rights will lapse.

 

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Q: As a holder of Ambev common ADSs, how do I exercise appraisal rights?

 

A: The Depositary will not exercise appraisal rights on behalf of holders of Ambev common ADSs. However, persons who have been continuously holding their Ambev common ADSs since December 7, 2012 and who do not vote in favor of the Stock Swap Merger will be able to exercise appraisal rights if they surrender their Ambev common ADSs and withdraw in Brazil the respective Ambev common shares underlying those ADSs prior to the expiration of the 30-day period for exercise of appraisal rights. Those holders will also be required to provide certain representations to Ambev to confirm that they have been continuously holding the surrendered Ambev common ADSs since December 7, 2012 until the applicable date of surrender and that they have not submitted instructions to the Depositary to vote in favor of the Stock Swap Merger. After completing these procedures, those former Ambev common ADS holders may exercise their appraisal rights as any other direct holder of Ambev common shares (see “As a holder of Ambev common shares, how do I exercise appraisal rights?” above).

 

Q: Could the Stock Swap Merger be unwound?

 

A: Yes. Under the Brazilian Corporation Law, if the Board of Directors of Ambev believes that the total value of the appraisal rights exercised by holders of Ambev common shares may put at risk the financial stability of the company, it may, within ten days after the expiration of the appraisal rights period, call an extraordinary shareholders’ meeting to either ratify or unwind the Stock Swap Merger. Payment relating to the exercise of appraisal rights will not be due if the Stock Swap Merger is unwound.

 

   If approved, we do not at this time expect that the Stock Swap Merger would be unwound, since the trading price of the Ambev free float common shares (R$78.20 as of June 26, 2013), which are the shares eligible for appraisal rights, is, and is expected to continue to be until the expiration of the appraisal rights exercise period, substantially higher than the cash sum of R$9.231 per Ambev common share payable by Ambev in connection with the exercise of those rights.

 

Q: What was the accounting treatment of the Contribution and what will be the accounting treatment of the Stock Swap Merger?

 

A: Under International Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board, or the IASB, the Contribution has been accounted for as a combination of entities under common control using the predecessor value method. Under the predecessor value method, the book values used to record assets and liabilities are those in the consolidated financial statements of ABI, the ultimate parent or the highest level of common control where consolidated financial statements are prepared (i.e., ABI accounting basis). As a result of the completion of the Contribution, the consolidated financial position and results of operations of Newbev include the historical Ambev financial statements in addition to certain purchase accounting adjustments recognized by ABI, our ultimate parent company, upon its acquisition of Ambev in 2004 and subsequent additional investments. Such purchase accounting adjustments relate to goodwill, fair value adjustments on property, plant and equipment and related deferred tax effect. The combined financial statements of Newbev and the Ambev equity interests held by ABI -controlled entities reflecting such predecessor value method accounting, or the Newbev Predecessor combined financial statements, are included elsewhere in this prospectus. These Newbev Predecessor combined financial statements are the historical consolidated financial statements of Newbev after the Contribution, after giving retroactive effect in earnings per share to the number of Newbev common shares outstanding immediately after the Contribution.

 

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   The Newbev Predecessor combined financial statements reflect the consolidation of Ambev, with the equity interest in Ambev not owned by ABI being shown as a noncontrolling interest. The exchange of shares in the Stock Swap Merger will be considered a transaction with noncontrolling interests that does not result in the loss of control, and will be accounted for as an equity transaction. The value of the Newbev common shares issued in the Stock Swap Merger will be recorded on Newbev’s capital stock and capital reserve accounts in equity, thus increasing flexibility for management of our capital structure. An offsetting amount equal to the difference between the value of the new Newbev common shares issued by Newbev and the carrying value of the Ambev shares acquired by Newbev will be recorded in an equity reserve account on Newbev’s balance sheet, in which case Newbev’s shareholders’ equity value will be equivalent to Ambev’s shareholders’ equity value immediately prior to the Stock Swap Merger. Also, upon completion of the Stock Swap Merger, Newbev’s financial statements will not reflect any noncontrolling interest accounts.

 

Q: What are the U.S. federal income tax consequences of the Stock Swap Merger?

 

A: The exchange of Ambev common shares, preferred shares or ADSs solely for new Newbev common shares or ADSs should qualify as a tax-free exchange of Ambev ADSs or shares of Ambev common or preferred stock for Newbev ADSs or shares of Newbev common stock for U.S. federal income tax purposes, and Newbev intends to treat it as such. However, this conclusion is not free from doubt, as discussed in more detail in “Part Five: The Stock Swap Merger—Tax Considerations—Material U.S. Income Tax Considerations—The Proposed Stock Swap Merger—Tax Treatment of the Proposed Stock Swap Merger.”

 

   In addition, the tax consequences of the Stock Swap Merger to you will depend on your specific situation. You should consult your tax advisor for a full understanding of the U.S. federal, state, local, Brazilian and other foreign tax consequences to you of the Stock Swap Merger and of the ongoing ownership and disposition of the Newbev common shares and ADSs that you will receive in this transaction, if approved. See “Part Five: The Stock Swap Merger—Tax Considerations,” for a description of the material U.S. federal income and Brazilian tax consequences of the Stock Swap Merger. In addition, see “Part Three: Risk Factors—Risks Relating to the Stock Swap Merger—We have not obtained a ruling under U.S. federal income tax law regarding the U.S. income tax consequences to U.S. holders of the new Newbev common shares and ADSs resulting from the Stock Swap Merger.”

 

Q: Are there risks associated with the Stock Swap Merger that I should consider when deciding on how to exercise my shareholder rights in connection with the transaction?

 

A: Yes. There are a number of risks related to the Stock Swap Merger that are discussed in this prospectus. In particular, please read the detailed description of risks associated with the Stock Swap Merger in “Part Three: Risk Factors—Risks Relating to the Stock Swap Merger.”

 

Q: Where can I find more information about Ambev, Newbev and the Stock Swap Merger?

 

A: You can find more information about Ambev, Newbev and the Stock Swap Merger from the various sources described under “Part Seven: Additional Information for Shareholders—Where You Can Find More Information.”

 

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Q: Who can help answer my questions?

 

A: If you have any questions about the Stock Swap Merger, you can contact us at the following address:

Companhia de Bebidas das Américas – Ambev

Attention: IR Department

Rua Dr. Renato Paes de Barros, 1017, 4º andar

04530-001 São Paulo, SP, Brazil

e-mail: ir@ambev.com.br

Telephone: +55 (11) 2122-1200

Facsimile: +55 (11) 2122-1526

www.ambev-ir.com

 

   In addition, if you are a holder of Ambev ADSs, you may also contact the Depositary or the information agent for the Stock Swap Merger at the addresses listed below:

The Bank of New York Mellon

c/o: Computershare Shareowner Services

480 Washington Blvd. – 27th Floor

Jersey City, NJ 07310

Calls within the United States: +1 (866) 300-4353 (toll free)

Calls outside the United States: +1 (201) 680-6921 (collect)

www.computershare.com

Innisfree M&A Incorporated

501 Madison Avenue, 20th Floor

New York, NY 10022

Calls within the United States and Canada: +1 (877) 456-3510 (toll free)

Calls outside the United States and Canada: +1 (412) 232-3651

For banks and brokers: +1 (212) 750-5833 (collect)

 

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PART TWO: SUMMARY

The following summary highlights selected information from this prospectus and may not contain all the information that may be important to you. To understand the Stock Swap Merger more fully, you should read carefully this entire prospectus.

The Companies

Overview of Newbev

Newbev is a closely held, non-reporting Brazilian corporation indirectly controlled by ABI that holds Ambev shares. Newbev does not have any operating revenues. In addition, relative to Ambev’s much greater assets and liabilities, Newbev does not have any material assets or liabilities. The most relevant asset in Newbev’s balance sheet as of December 31, 2012 was a 0.5% ownership interest in Ambev’s capital stock, equal to 1.1% of the Ambev preferred shares, with a book value of R$1,274.7 million as of that date. As a result of the Contribution, which occurred on June 17, 2013, Newbev became the direct holder of 74.0% and 46.3% of the Ambev common shares and preferred shares, respectively, and accordingly Ambev’s direct controlling shareholder.

At a combined annual and extraordinary general shareholders’ meeting held on March 1, 2013, Newbev’s legal name was changed from InBev Participações Societárias S.A. to Ambev S.A. Newbev’s legal and corporate headquarters is located at Rua Dr. Renato Paes de Barros, 1017, 3rd floor, 04530-001, São Paulo, SP, Brazil, and its telephone number is +55 (11) 2122-1200.

Overview of Ambev

We are the largest brewer in Latin America in terms of sales volumes and one of the largest beer producers in the world, according to our estimates. We produce, distribute and sell beer, carbonated soft drinks, or CSD, and non-alcoholic and non-carbonated, or NANC, products in 16 countries across the Americas. We are one of the largest PepsiCo independent bottlers in the world.

We conduct our operations through three principal business segments:

 

   

Latin America North, which includes our operations in Brazil, where we operate two divisions (the beer sales division and the CSD & NANC sales division), and our Hispanic Latin America, or HILA-Ex, operations, which includes our operations in the Dominican Republic, Saint Vincent, Antigua, Dominica, Guatemala (which also serves El Salvador and Nicaragua) and Peru and Ecuador (both of which became part of our Latin America South business segment starting in 2013);

 

   

Latin America South, which includes our operations in Argentina, Bolivia, Paraguay, Uruguay, Chile and, starting in 2013, Peru and Ecuador; and

 

   

Canada, represented by the operations of Labatt Brewing Company Limited, or Labatt, which includes domestic sales in Canada and some exports to the U.S. market.

 

 

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The following map illustrates our three business segments as of March 31, 2013.

 

LOGO

Business Strategy

We aim to continuously create value for our shareholders. The main components of our strategy to achieve this goal include:

 

   

our people and culture;

 

   

top line growth;

 

   

building strong brands;

 

   

excellence in route to market;

 

   

permanent cost efficiency; and

 

   

financial discipline.

 

 

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Our People and Culture

We believe highly qualified, motivated and committed employees are critical to our long-term success. We carefully manage our hiring and training process with a view to recruiting and retaining outstanding professionals. In addition, we believe that through our compensation program, which is based both on variable pay and stock ownership, we have created financial incentives for high performance and results. Another core element of our culture is our distinguished managerial capability, which is characterized by (1) a hardworking ethos, (2) results-focused evaluations, (3) the encouragement of our executives to act as owners and not only as managers, (4) leadership by personal example, and (5) appreciation of field experience.

Top Line Growth

We are constantly seeking sustainable growth of our net revenues. For instance, in Brazil we have focused our efforts behind four main commercial strategies:

 

   

innovation: we seek to expand the beer category and maintain a healthy pipeline of products through innovation in liquids, packaging and route to market to continue connecting with consumers in different consumption occasions;

 

   

premium: we believe the weight of premium brands volume can grow in the Brazilian beer industry and we are working towards leading this growth through our portfolio of domestic and international premium brands;

 

   

regional expansion: we have been investing to expand our presence in the North and Northeast regions of Brazil mainly due to the per capita consumption and market share growth opportunities. We focus on expanding our production capacity and executing our strong brands and route to market capabilities in those faster growing regions of Brazil; and

 

   

returnable glass bottles: our commercial initiatives are focused on strengthening the on-premise channel (e.g., Nosso Bar franchise, micro events) and reintroducing returnable bottles into the off-premise channel (e.g., Pit Stop formats in supermarkets, 300 ml returnable glass bottle).

Building Strong Brands

We believe that building strong brands that connect and create enduring bonds with our consumers is a fundamental prerequisite to assure the sustainability of our business in the future. Our consumers are the reason for everything we do and we need to understand them, be close to them and connect them to our brands in order to build enduring ties with them. We bring together tradition and modernity in our product portfolio in a clear strategy to create value and insert our brands into the lives of our consumers.

Excellence in Route to Market

Delivering our brands to almost one million points of sale in Brazil is a very complex feature of our business. For several years, one of our main areas of focus has been to increase direct distribution

 

 

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in major cities while still strengthening our third-party distribution system. In Brazil, for instance, instead of operating three legacy, parallel, single-brand systems (each dedicated to one of our major brands: Skol, Brahma and Antarctica), we have been shifting towards a multi-brand network of distributors committed to handling all of our brands. In addition, we are constantly seeking to improve our point of sale execution through new and creative measures. One of our key marketing initiatives was the introduction into the Brazilian market of our custom-made beverage refrigerators designed and built to chill beer and soft drinks to the optimal temperature for on-premise consumption. These refrigerators also work as effective marketing tools, as they are decorated with images related to our core brands.

Permanent Cost Efficiency

Cost control is one of the top priorities of our employees. Each of our departments must comply with its respective annual budget for fixed and variable costs. As a means of avoiding unnecessary expenses, we have designed a management control system inspired on “zero-base budgeting” concepts that requires every manager to build from scratch an annual budget for his/her respective department.

Financial Discipline

Our focus is not only on volumes and operating performance, but also on the disciplined management of our working capital and cash flow generation. Our objective is to maximize the return to our shareholders through a combination of payments of dividends and interest on shareholders’ equity, while at the same time keeping our investment plans and holding an adequate level of liquidity to accommodate the seasonality of our business and cope with often volatile and uncertain financial market conditions.

Ambev’s legal and corporate headquarters is located at Rua Dr. Renato Paes de Barros, 1017, 4th floor, 04530-001, São Paulo, SP, Brazil, and its telephone number is +55 (11) 2122-1200.

The Contribution

As a preliminary step to the Stock Swap Merger, on June 17, 2013 ABI caused two of its subsidiaries, Interbrew International B.V., or IIBV, and AmBrew S.A., or AmBrew, to contribute to Newbev, or the Contribution, all of the Ambev shares that were previously held directly in Ambev by those two subsidiaries - equivalent to a total of 1,301,666,481 Ambev common shares and 622,078,314 Ambev preferred shares - in consideration for new Newbev common shares that were issued by Newbev as part of a capital increase of this company. The Contribution was made for an amount of R$16,413,757,376.00, of which half was allocated to capital stock and the other half to capital reserves.

The equity ownership that all Ambev’s shareholders, including its minority shareholders, hold in Ambev immediately prior to the approval of both the Contribution and the Stock Swap Merger will be exactly the same as the total equity ownership that those shareholders will hold in Newbev immediately following the consummation of both those transactions. This means that no premium was ascribed to the Ambev shares representing a direct controlling interest in us that were contributed to Newbev by IIBV and AmBrew in the Contribution. Consequently, the Contribution has no dilutive effect to Ambev’s shareholders, including its noncontrolling shareholders.

 

 

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Similarly, in order to ensure that shareholders’ equity ownership in Ambev remains unchanged after the transactions described in this prospectus, a reverse stock-split of Newbev was approved at a subsequent order of the day during the same Newbev shareholders’ meeting that approved the Contribution, so that the number of shares in Newbev’s capital stock can be proportional to the number of shares in Ambev’s capital stock after the Contribution. This proportionality between the capital stocks of both companies following the Contribution is important to allow the total number of Newbev common shares outstanding immediately after the Stock Swap Merger to match the total number of Ambev shares outstanding immediately prior to that transaction, taking into account the Stock Swap Merger’s exchange ratio of five newly issued Newbev common shares for each Ambev common or preferred share exchanged.

As a result of the Contribution and the referred reverse stock-split, and until the Stock Swap Merger is approved:

 

   

Newbev’s capital stock is equal to R$8,455,939,990.00 divided into 9,693,597,815 Newbev common shares, without par value;

 

   

Newbev is the direct controlling shareholder of Ambev with 74.0% and 46.3% of the Ambev common shares and preferred shares, respectively; and

 

   

IIBV and AmBrew are the direct holders of all of Newbev’s common shares.

Terms of the Stock Swap Merger

Pursuant to the terms of the Stock Swap Merger:

 

   

holders of common shares or preferred shares of Ambev will receive five new common shares, no par value, of Newbev in exchange for each Ambev common or preferred share they hold; and

 

   

holders of common or preferred ADSs of Ambev will receive five new ADSs of Newbev, each representing the right to receive one Newbev common share, in exchange for each Ambev common or preferred ADS they hold.

 

 

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The following diagram sets forth the corporate structure of Ambev and Newbev after the recently completed Contribution but before the Stock Swap Merger, and after both those transactions.

 

LOGO

Effects of the Stock Swap Merger

As a result of the Stock Swap Merger:

 

   

we will become a company with a single-class share structure comprised exclusively of voting common stock;

 

   

your equity ownership in Newbev following the consummation of the Stock Swap Merger will be the same as the total equity ownership you held in Ambev immediately before the transaction is consummated;

 

   

based on the number of Ambev common and preferred shares subject to the Stock Swap Merger on June 26, 2013 and the Stock Swap Merger’s exchange ratio of five new Newbev common shares for each and every Ambev common or preferred share surrendered, Newbev will issue 5,967,838,305 new Newbev common shares, assuming no exercise of appraisal rights;

 

   

based on the number of Ambev common and preferred shares subject to the Stock Swap Merger on June 26, 2013 and the Stock Swap Merger’s exchange ratio of five new Newbev common shares for each and every Ambev common or preferred share surrendered, Newbev’s new capital stock following the Contribution and the Stock Swap Merger will be equal to R$56,983,340,778.38 divided into 15,661,436,120 Newbev common shares,

 

 

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without par value, assuming no exercise of appraisal rights and no additional stock issuances by Newbev until the Ambev EGM;

 

   

Ambev will become a wholly-owned subsidiary of Newbev, and Newbev’s interest in the net book value and net income (loss) of Ambev will therefore increase to 100%;

 

   

as the Stock Swap Merger will not cause Ambev to merge with and into Newbev, Newbev will not be the legal successor to the rights and obligations of Ambev unless and until the subsequent upstream merger of Ambev with and into Newbev is effected (see “Part Five: The Stock Swap Merger—Plans and Proposals”);

 

   

a greater number of Newbev common shares and ADSs will be listed on the BM&FBOVESPA and the NYSE, respectively, as compared to the number of Ambev shares and ADSs currently listed on those stock exchanges;

 

   

the Ambev common and preferred shares are expected to be deregistered under the Exchange Act and Ambev will no longer file annual reports on Form 20-F or furnish reports on Form 6-K to the SEC;

 

   

the Ambev common and preferred ADSs will be delisted from the NYSE, the Ambev common and preferred shares will be delisted from the BM&FBOVESPA and Ambev will be deregistered with the CVM; and

 

   

Newbev will become subject to the reporting requirements of the Exchange Act, the Brazilian Corporation Law and the rules of the CVM and, consequently, shall file annual reports on Form 20-F and furnish to the SEC on Form 6-K the reports that it may file in Brazil with the CVM or the BM&FBOVESPA.

Purpose of and Reasons for the Stock Swap Merger

Due to the following factors, we believe that the Stock Swap Merger may promote several benefits for us and our shareholders, including a resulting company with improved trading liquidity, enhanced corporate governance standards and increased flexibility for management of our capital structure:

 

   

by having a single-class share structure comprised exclusively of common shares:

 

  ¡    

our corporate governance will become more aligned with that of our principal global peers that also have a single-class share structure, including, among others, The Coca-Cola Company, PepsiCo Inc., Diageo plc and Anheuser-Busch InBev N.V./S.A.;

 

  ¡    

we expect that the liquidity of the Newbev common shares and ADSs will be greater than the liquidity of Ambev’s two separate share classes and respective ADSs;

 

  ¡    

we expect that Newbev’s shareholder base will be larger than that of Ambev, as Newbev will become eligible for investment by certain institutional investors who are restricted from investing in non-voting shares, such as the Ambev preferred shares, or in companies having more than one share class, such as Ambev;

 

 

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  ¡    

we expect that our shares will have a greater participation in certain stock indices, such as the IBOVESPA Index (the BM&FBOVESPA’s most known stock index), due to the fact that the weight of a given stock on most stock indices is a function of its trading volume and, with the consolidation of our two share classes into a single share class, all our free float shares will belong to the same share class, as a result of which it is expected that their trading volume should increase; this contrasts with the current scenario where Ambev’s free float is split into two share classes, with the preferred shares being more liquid than the common shares (currently Ambev’s largest share class) because of greater ownership concentration in the latter with our controlling shareholders (i.e., as of June 26, 2013, Ambev’s common shares accounted for 56.1% of the company’s share capital and only 8.9% of those common shares were free float shares);

 

  ¡    

with the expected increase in the participation of our shares on the IBOVESPA Index, investment funds that track those indices would be required to purchase additional shares in us to adjust their portfolio to reflect our expected increased participation on that stock index, thereby increasing demand for our shares; and

 

  ¡    

we expect that it will be possible to increase the flexibility for management of our capital structure, including by potentially increasing our payout capacity;

 

   

by having all of the Ambev preferred shares converted into Newbev common shares, our shareholders will benefit from enhanced corporate governance standards resulting from the widespread availability to all our shareholders of certain shareholder rights under the Brazilian Corporation Law that are only available to common shareholders, such as full voting rights and the right to be included in a mandatory change of control tender offer under the Brazilian Corporation Law that ensures that holders of common shares are offered 80% of the price per share paid to a selling controlling shareholder in the event of a disposition of Newbev’s control; and

 

   

because Newbev’s bylaws will provide for certain corporate governance enhancements not currently provided for under Ambev’s bylaws, such as a higher minimum mandatory dividend and the required presence of two independent members on the Board of Directors, our shareholders will enjoy enhanced corporate governance standards once they become shareholders of Newbev following the Stock Swap Merger, as their investment in us will then be governed by Newbev’s improved bylaws.

Considerations for Noncontrolling Shareholders

Despite the benefits of, and reasons for, the Stock Swap Merger, noncontrolling shareholders should consider the following factors when analyzing the transaction:

 

   

after the Stock Swap Merger, our ultimate controlling shareholders, ABI and FAHZ, will continue to have voting control over us and our Board of Directors;

 

   

because the exchange of Ambev preferred shares for new Newbev common shares resulting from the Stock Swap Merger will cause Ambev’s dual-class share structure to be converted

 

 

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into a single-class share structure comprised exclusively of voting common shares, holders of Ambev common shares, including our controlling shareholders, will experience a dilution of their voting power in us as compared to the voting power they have in Ambev prior to the Stock Swap Merger;

 

   

holders of Ambev preferred shares (including in the form of ADSs) are not entitled to appraisal rights in connection with the Stock Swap Merger;

 

   

because the Depositary will not exercise appraisal rights on behalf of Ambev common ADS holders, those holders will have to surrender their Ambev common ADSs and withdraw in Brazil the respective Ambev common shares underlying such ADSs prior to the expiration of the 30-day appraisal rights exercise period if they intend to exercise appraisal rights; and

 

   

while the exchange of Ambev preferred shares for Newbev common shares will provide Ambev preferred shareholders with certain rights under the Brazilian Corporation Law that are inherent to common shares and that they currently do not enjoy, including (1) full voting rights, (2) the right to be included in a statutory change of control tender offer in the event of a disposition of Newbev’s control, and (3) the right to participate in a voting block representing at least 10% of the Newbev common shares to elect one member and respective alternate to our Fiscal Council without the participation of the controlling shareholders, they will lose certain special rights that their Ambev preferred shares currently confer to them, including:

 

  ¡    

enhanced dividend distribution rights requiring that dividends paid in respect of the Ambev preferred shares be 10% greater than those payable in respect of the Ambev common shares;

 

  ¡    

priority in capital reimbursement relative to the Ambev common shares upon a liquidation of Ambev; and

 

  ¡    

the right to elect one member and respective alternate to our Fiscal Council by means of a separate class vote of preferred shareholders.

Approval of the Stock Swap Merger

Under the Brazilian Corporation Law, an affirmative vote of holders representing at least half of the issued and outstanding Ambev common shares is required to approve the Stock Swap Merger.

As a result of the Contribution, Newbev became the direct holder of 74.0% of the Ambev common shares, which at the time of the Ambev EGM will form a 91.1% aggregate interest in the Ambev common shares when considered together with the 17.1% interest in those shares that are currently held by FAHZ. However, neither Newbev nor FAHZ will vote their Ambev common shares to approve the Stock Swap Merger, unless a majority of the minority-held Ambev common and preferred shares present at the Ambev EGM, as separate classes and without the participation of our controlling shareholders, are each in favor of the transaction pursuant to the special voting procedures for minority shareholder protection that will be adopted for that shareholders’ meeting. If the majority of those minority-held Ambev common and preferred shares, as separate classes and without the

 

 

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participation of our controlling shareholders, are each in favor of the Stock Swap Merger, Newbev and FAHZ will vote their Ambev common shares in favor of the transaction only so that the deliberation to approve it complies with applicable minimum quorum requirements under the Brazilian Corporation Law. If the majority of the minority-held shares in either of those share classes are not in favor of the transaction, Newbev and FAHZ will either vote their Ambev common shares against it or abstain from voting, in order to uphold the opinion on the Stock Swap Merger that the majority of the minority-held Ambev common and preferred shares shall express, as separate classes and without the participation of our controlling shareholders, at the Ambev EGM.

In addition, an affirmative vote of holders representing at least a majority of the Newbev common shares present at a duly convened extraordinary general shareholders’ meeting of Newbev to vote on the Stock Swap Merger is required to approve the transaction. However, all of the issued and outstanding Newbev common shares are beneficially owned by ABI, which has advised us that it will vote all its Newbev common shares in favor of the transaction, provided that it is approved by the required vote of Ambev’s shareholders at the Ambev EGM. The shareholders’ meeting of Newbev to vote on the Stock Swap Merger is scheduled to be held on July 30, 2013, the same day of the Ambev EGM.

In addition, the approval by the BM&FBOVESPA and the NYSE for the listing of the Newbev common shares and ADSs, respectively, to be delivered in the Stock Swap Merger must be obtained for those securities to be traded by their holders on those stock exchanges. Although this approval is important for holders of our shares and ADSs to be able to freely trade the Newbev securities they will receive in the Stock Swap Merger and is expected to be obtained on or about the date the transaction is consummated, it is not a condition to the completion of the transaction.

Special Voting Procedures for Minority Shareholder Protection

Although under the Brazilian Corporation Law preferred shares do not have voting rights in connection with mergers and corporate restructurings in general, at the Ambev EGM minority holders of Ambev preferred shares (including in the form of ADSs) will be asked in an exclusive poll of preferred shareholders if they are against the Stock Swap Merger. If a majority of the minority-held Ambev preferred shares participating in the preferred shareholders’ poll is against the Stock Swap Merger, then Newbev and FAHZ will vote their Ambev common shares against the transaction and, consequently, it will not be approved.

If a majority of the minority-held Ambev preferred shares participating in the preferred shareholders’ poll is not against the Stock Swap Merger, then the transaction will be submitted to a vote of minority holders of Ambev common shares (including in the form of ADSs). At that point, if a majority of the minority-held Ambev common shares present and voting at the Ambev EGM votes against the Stock Swap Merger, then the transaction will not be approved.

None of ABI, FAHZ or the Affiliated Holders will use the Ambev preferred or common shares beneficially owned by them to vote in favor or against the Stock Swap Merger in the preferred shareholders’ poll or the minority common shareholder vote on the transaction. In addition, none of their Ambev shares will be included in the quorum of shares eligible to participate in the preferred shareholders’ poll or the minority common shareholder vote on the Stock Swap Merger.

 

 

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Further, abstentions will not be counted as votes for or against the Stock Swap Merger at the preferred shareholders’ poll or the minority common shareholder vote on the Stock Swap Merger or on any other matter subject to deliberation at the Ambev EGM. They will also not be counted in the quorum of shares eligible to participate in the preferred shareholders’ poll or the minority common shareholder vote on the Stock Swap Merger.

Therefore, the Stock Swap Merger will only be approved if a majority of the minority-held Ambev common shares present and voting at the Ambev EGM votes in favor of the transaction, provided that it has not been rejected by a majority of the minority-held Ambev preferred shares participating in the preferred shareholders’ poll. Only in such a case will Newbev and FAHZ vote their Ambev common shares to approve the Stock Swap Merger, and they will do so only to ensure that the deliberation to approve the transaction complies with applicable minimum quorum requirements under the Brazilian Corporation Law.

The Ambev EGM

The Ambev EGM will be held on July 30, 2013, at 10:00 a.m. local time, at Ambev’s principal executive offices at Rua Dr. Renato Paes de Barros, 1017, 4th floor, São Paulo, SP, Brazil.

A quorum comprised of at least two -thirds of the issued and outstanding common shares of Ambev is necessary to open the Ambev EGM. Because as a result of the Contribution Newbev became the direct holder of 74.0% of the Ambev common shares, the presence of Newbev at the Ambev EGM will be sufficient to establish a quorum to open the meeting.

To participate in the Ambev EGM, direct holders of Ambev common and preferred shares must either appear at the meeting in person or grant an appropriate power of attorney to another Ambev shareholder or a Brazilian attorney. Any such powers of attorney must have been issued, at most, one year prior to the Ambev EGM and must be certified by a notary public and, if executed outside Brazil, consularized by the Brazilian consulate located in the domicile of the grantor. A shareholder that is a legal entity shall be represented by its duly appointed legal representatives.

Powers of attorney granted by Ambev shareholders for their representation at the Ambev EGM must be deposited at Ambev’s principal executive offices at Rua Dr. Renato Paes de Barros, 1017, 4th floor, 04530-001, São Paulo, SP, Brazil, preferably at least three business days prior to the Ambev EGM. Powers of attorney observing the same formalities described above will also be required for any proxies that Ambev’s preferred shareholders may wish to appoint to attend and participate on their behalf at the Ambev EGM and in the preferred shareholders’ poll concerning the Stock Swap Merger.

We urge Ambev shareholders to consult Brazilian counsel when preparing any such powers of attorney (or related revocation instruments) to ensure that they comply with basic Brazilian legal requirements, as Ambev cannot, and will not, accept any forms that do not comply with those requirements.

Holders of Ambev shares wishing to attend the Ambev EGM and who hold shares through the Fungible Custody of Registered Shares of Brazilian Stock Exchanges must provide a statement containing their corresponding equity interest in Ambev dated within 48 hours of the Ambev EGM.

 

 

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In accordance with the Brazilian Corporation Law, there is no record date for Ambev shareholders who hold their Ambev shares directly to attend and vote at the Ambev EGM. Those Ambev shareholders who are listed on the share registry of Ambev on the date of the meeting will be entitled to participate in and vote at the Ambev EGM.

If you are a direct holder of Ambev shares, none of Newbev, Ambev, any of their affiliates or any members of their respective boards of directors or the boards of directors of those affiliates is soliciting any proxy from you or requesting that you send a proxy or its equivalent to any of them. The foregoing discussion of the procedures for voting your Ambev shares at the Ambev EGM has been provided for your convenience only. We urge you to consult Brazilian counsel with any questions on your voting rights and related procedures for the Ambev EGM.

Ambev ADS holders are not entitled to attend the Ambev EGM. Instead, Ambev ADS will be represented at the Ambev EGM by the Depositary, which will vote the Ambev shares underlying the Ambev ADSs held by those holders as instructed by them. Ambev ADS holders of record as of the close of business, local time, on July 1, 2013 will be entitled to instruct the Depositary as to how to vote the Ambev shares underlying their Ambev ADSs at the Ambev EGM. Those holders will receive in the mail information from the Depositary explaining what they have to do in order to provide the Depositary with instructions on how to vote the Ambev shares underlying their Ambev ADSs at the Ambev EGM. Those Ambev ADS holders of record should provide the Depositary with clear voting instructions by no later than the applicable cut-off date for receipt of voting instructions by the Depositary to allow the Depositary sufficient time to record the instructions provided and vote the Ambev shares underlying the relevant Ambev ADSs in accordance with those instructions.

Appraisal Rights

Holders of Ambev preferred shares (including in the form of Ambev ADSs) are not entitled to appraisal rights in connection with the Stock Swap Merger, because those shares meet certain liquidity and dispersion criteria under the Brazilian Corporation Law that exempts Ambev from extending appraisal rights to dissenting preferred shareholders of the transaction.

According to Section 137 of the Brazilian Corporation Law, persons who were holders of record of Ambev common shares continuously since December 7, 2012, the date of publication of the first press release on the Stock Swap Merger, until the relevant appraisal rights exercise date are entitled to appraisal rights in connection with the Stock Swap Merger until the expiration of a period that ends 30 days after the publication of the minutes of the Ambev EGM, as long as they submit their requests by this date and do not vote in favor of the Stock Swap Merger at the Ambev EGM. Holders of Ambev common shares who exercise this right will receive from Ambev a cash amount for their Ambev common shares equal to R$9.231 per Ambev common share, calculated in accordance with the Brazilian Corporation Law as the book value per share of Ambev’s shareholders’ equity as set forth in Ambev’s balance sheet as of December 31, 2012.

The Depositary will not exercise appraisal rights on behalf of holders of Ambev common ADSs. However, persons who held Ambev common ADSs continuously since December 7, 2012 will be able to exercise appraisal rights if they surrender their Ambev common ADSs and withdraw in Brazil the respective Ambev common shares underlying those ADSs prior to the Ambev EGM. After completing this procedure, those former Ambev common ADS holders may participate in the Ambev

 

 

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EGM and exercise their appraisal rights as any other direct holder of Ambev common shares. Holders of Ambev common ADSs who surrender their ADSs to withdraw the underlying Ambev common shares in order to participate in the Ambev EGM and exercise appraisal rights in Brazil must obtain a statement from their broker to confirm that they held their Ambev common ADSs continuously since December 7, 2012 until the date of surrender of those securities to the Depositary. In addition, if the surrender of those ADSs occurs after the Ambev EGM and prior to the expiration of the 30-day appraisal rights exercise period, all former holders of the surrendered Ambev common ADSs and ADRs must provide an affidavit confirming that they have not submitted instructions to the Depositary to vote in favor of the Stock Swap Merger. In addition, registered holders of Ambev ADSs who exercise appraisal rights in accordance with the procedures outlined above must provide an affidavit confirming that they held their Ambev common ADRs continuously since December 7, 2012 until the date of surrender of those securities.

Valuation Reports

Valuation of the Ambev Common and Preferred Shares

In compliance with Sections 8 and 252 of the Brazilian Corporation Law, Newbev retained the specialized firm Apsis Consultoria Empresarial Ltda., or Apsis, to prepare a valuation report to appraise the value, based on stock exchange trading prices, of the Ambev common and preferred shares that will be surrendered to Newbev by Ambev’s shareholders (and therefore merged into Newbev’s asset base) as a result of the Stock Swap Merger, or the Ambev Shares Valuation Report. The purpose of the Ambev Shares Valuation Report is to verify whether the value of the Ambev shares to be surrendered to Newbev in the Stock Swap Merger supports the amount of the capital increase that Newbev will experience as a result of this transaction. When calculating the value of the Ambev shares subject to the Stock Swap Merger, Apsis took into account their trading prices on the BM&FBOVESPA during 30 consecutive trading sessions starting on March 15, 2013 and ending on April 26, 2013 (inclusive), which is the effective date (data base) of the valuation report. Pursuant to the Ambev Shares Valuation Report, the weighted average price of the Ambev shares that will be surrendered to Newbev as a result of the Stock Swap Merger is equal to R$81.314872 per Ambev common or preferred share, and supports a capital increase of Newbev as of April 26, 2013 of R$97,041,737,123.64. An English-language translation of the full text of the Ambev Shares Valuation Report has been included as Annex C to this prospectus and is also included in the Stock Swap Merger Agreement that has been filed as an exhibit to the registration statement of which this prospectus forms a part.

Market Value of Ambev’s and Newbev’s Net Equity

In compliance with Section 264 of the Brazilian Corporation Law, Ambev and Newbev retained Apsis to prepare a valuation report of the market value of Ambev’s and Newbev’s net equity under the same criteria and as of a same date, or the Net Equity Valuation Report. The market value of a company’s net equity, as provided under Section 264 of the Brazilian Corporation Law, may be viewed as a proxy for its liquidation value as if all its assets and liabilities were liquidated at their fair market value on a same given date. Based on the market value of the net equity of Ambev and Newbev, as appraised by the Net Equity Valuation Report of Apsis, an exchange ratio of Ambev shares for Newbev common shares was calculated. The purpose of calculating such exchange ratio is to provide Ambev’s noncontrolling shareholders with a parameter against which to evaluate the Stock Swap

 

 

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Merger’s exchange ratio and to determine whether to dissent from the shareholder vote and, in the case of the Ambev common shareholders, whether to exercise appraisal rights. According to the Net Equity Valuation Report of Apsis, as of December 31, 2012: (1) the market value of Ambev’s net equity is R$29,176.5 million, or R$9.330767 per Ambev common or preferred share, and (2) the market value of Newbev’s net equity is R$18,097.8 million, or R$1.866991 per Newbev common share. As a result, based on the market value of Ambev’s and Newbev’s net equity, as determined in the Net Equity Valuation Report of Apsis under the same criteria and as of a same date (i.e., December 31, 2012), the ratio to exchange Ambev common or preferred shares for Newbev common shares would be 4.997757 Newbev common shares for each Ambev common or preferred share. An English-language translation of the full text of the Net Equity Valuation Report has been included as Annex D to this prospectus.

The valuation reports of Apsis are not intended to be, and do not constitute, a recommendation or opinion to Newbev, Ambev or any shareholder of those companies as to any matters relating to the Stock Swap Merger, including as to how shareholders should vote on the transaction. We urge you to read carefully the summary of these reports that are set forth in “Part Five: The Stock Swap Merger—Principal Transaction Documents—The Apsis Valuation Reports,” as well as the full text of the reports included as Annex C and Annex D to this prospectus.

Financial Advisors

N M Rothschild & Sons (Brasil) Limitada has acted as a financial advisor to Ambev for the main purpose of assisting Ambev’s management with the analysis of potential deal structures, and their related impacts to Ambev and its shareholders, in connection with a proposed recapitalization of Ambev aimed at converting its current dual-class share structure into a single-class share structure comprised exclusively of voting common shares.

Banco Itaú BBA S.A. has acted as a financial advisor to Ambev for the main purpose of providing Ambev’s management with intelligence on the market’s view of the proposed Stock Swap Merger and related corporate transactions, including by monitoring significant fluctuations in Ambev’s shareholder base throughout the process of implementing those transactions.

Both financial advisors assisted Ambev with the review and discussion of the principal transaction documents from a financial advisor’s perspective and provided the company with other customary financial- and market-related advice for restructurings such as the one being contemplated at the time.

 

 

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Timetable for the Stock Swap Merger

 

Meeting of the Board of Directors of Ambev to analyze the Stock Swap Merger Agreement

     May 10, 2013   

Meeting of the Fiscal Council of Ambev to analyze the Stock Swap Merger

     May 10, 2013   

Announcement of the complete terms of the Stock Swap Merger pursuant to CVM Instruction No. 319/99

     May 10, 2013   

Notice of the Ambev EGM published in Valor Econômico and Diário Oficial do Estado de São Paulo

     June 28, 2013   

Record date of Ambev ADS holders eligible to receive voting cards

     July 1, 2013   

Mailing of prospectus to holders of Ambev ADSs

     on or about July 11, 2013   

Cut-off date for receipt of voting cards by the Depositary

     July 25, 2013   

Ambev EGM held

     July 30, 2013   

Beginning of appraisal rights exercise period

     August 1, 2013   

End of appraisal rights exercise period

     August 30, 2013   

Expected last day of trading of Ambev shares on the BM&FBOVESPA and of Ambev ADSs on the NYSE

     on or about August 30, 2013   

Expected first day of trading of new Newbev common shares on the BM&FBOVESPA and of new Newbev ADSs on the NYSE

     on or about September 2, 2013   

Credit of new Newbev common shares with the Brazilian custodian

     on or about September 5, 2013   

Depositary begins to deliver Newbev ADSs upon surrender of Ambev ADSs

     on or about September 6, 2013   

Management

Newbev’s Board of Directors is currently composed of three members, with Mr. Jean-Louis Julien Van de Perre as Chairman, and Ms. Isabela Gerjoi Bezerra de Souza and Ms. Ann Malcy Christine Randon as directors. These directors are employees and/or affiliates of ABI.

Following the Ambev EGM, a shareholders’ meeting of Newbev will be held to elect its new Board, which will be composed of a total of ten members, who are the current ten members of Ambev’s Board of Directors. Approximately 30 days after the Newbev common shares and ADS start trading on the BM&FBOVESPA and the NYSE, respectively, an extraordinary general shareholders’ meeting of Newbev will be called to elect a new Board of Directors for this company. This new Board will include the two new independent directors in addition to nine other directors, who are expected to be appointed from Ambev’s current Board of Directors. This second election of directors for Newbev will be conducted to ensure that all the new members of the full Board of Directors of Newbev who will manage the company following the Stock Swap Merger, if approved, are not appointed by IIBV and AmBrew before that transaction is consummated and, therefore, while those two entities are Newbev’s sole shareholders. It is expected that the term of office of the new members to be elected to Newbev’s Board of Directors after the consummation of the Stock Swap Merger will expire with Newbev’s 2016 Annual General Shareholders’ Meeting.

 

 

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Newbev currently has two executive officers, with Mr. Ricardo Gonçalves Melo as investor relations officer and Ms. Daniela Rodrigues Lopes as a general executive officer. These executive officers are employees of Ambev.

As soon as reasonably practicable following the Ambev EGM, a meeting of Newbev’s ten-member Board of Directors to be elected at a shareholders’ meeting of Newbev following the Ambev EGM will be held to replace Newbev’s two current executive officers with eleven new executive officers, all of whom are the current executive officers of Ambev and have their mandates as Ambev executive officers expiring on December 31, 2013. It is expected that the term of office of the new executive officers of Newbev to be elected after the Ambev EGM will expire in 2016.

Stock Exchange Matters

If the Stock Swap Merger is approved, we expect that the Newbev common shares and ADSs issued in connection with the Stock Swap Merger will be listed and admitted to trading on the BM&FBOVESPA and NYSE, respectively, on or about the date the transaction is consummated. The Newbev common shares and ADSs are expected to trade on the BM&FBOVESPA and NYSE under the ticker symbols “ABEV3” and “ABEV,” respectively.

After the consummation of the Stock Swap Merger, the Ambev common and preferred shares will be delisted from the BM&FBOVESPA and the Ambev ADSs will be delisted from the NYSE.

Accounting Treatment of the Contribution and the Stock Swap Merger

Under IFRS, as issued by the IASB, the Contribution has been accounted for as a combination of entities under common control using the predecessor value method. Under the predecessor value method, the book values used to record assets and liabilities are those in the consolidated financial statements of ABI, the ultimate parent or the highest level of common control where consolidated financial statements are prepared (i.e., ABI accounting basis). As a result of the completion of the Contribution, the consolidated financial position and results of operations of Newbev include the historical Ambev financial statements in addition to certain purchase accounting adjustments recognized by ABI, our ultimate parent company, upon its acquisition of Ambev in 2004 and subsequent additional investments. Such purchase accounting adjustments relate to goodwill, fair value adjustments on property, plant and equipment and related deferred tax effect. The Newbev Predecessor combined financial statements reflect such predecessor value method accounting and have been included elsewhere in this prospectus. These Newbev Predecessor combined financial statements are the historical consolidated financial statements of Newbev after the Contribution, after giving retroactive effect in earnings per share to the number of Newbev common shares outstanding immediately after the Contribution.

The Newbev Predecessor combined financial statements reflect the consolidation of Ambev, with the equity interest in Ambev not owned by ABI being shown as a noncontrolling interest. The exchange of shares in the Stock Swap Merger will be considered a transaction with noncontrolling interests that does not result in the loss of control, and will be accounted for as an equity transaction. The value of the Newbev common shares issued in the Stock Swap Merger will be recorded on Newbev’s capital stock and capital reserve accounts in equity, thus increasing flexibility for management of our capital structure. An offsetting amount equal to the difference between the value of

 

 

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the new Newbev common shares issued by Newbev and the carrying value of the Ambev shares acquired by Newbev will be recorded in an equity reserve account on Newbev’s balance sheet, in which case Newbev’s shareholders’ equity value will be equivalent to Ambev’s shareholders’ equity value immediately prior to the Stock Swap Merger. Also, upon completion of the Stock Swap Merger, Newbev’s financial statements will not reflect any noncontrolling interest accounts.

Material Tax Considerations

The proposed Stock Swap Merger should qualify as a tax-free exchange of Ambev ADSs or shares of Ambev common or preferred stock for Newbev ADSs or shares of Newbev common stock for U.S. federal income tax purposes, and Newbev intends to treat it as such. If the Stock Swap Merger so qualifies as a tax-free exchange, generally no gain or loss will be recognized by a holder of Ambev common shares, preferred shares or ADSs upon such holder’s receipt solely of Newbev common shares or ADSs in exchange for Ambev common shares, preferred shares or ADSs for U.S. federal income tax purposes pursuant to the proposed Stock Swap Merger. However, this conclusion is not free from doubt, as discussed in more detail in “Part Five: The Stock Swap Merger—Tax Considerations—Material U.S. Federal Income Tax Considerations—The Proposed Stock Swap Merger—Tax Treatment of the Proposed Stock Swap Merger.”

In addition, the tax consequences of the Stock Swap Merger to you will depend on your specific situation. We urge you to consult your tax advisor for a full understanding of the U.S. federal, state, local, Brazilian and other foreign tax consequences to you arising from the Stock Swap Merger and of the ongoing ownership and disposition of the Newbev common shares and ADSs that you will receive in this transaction, if approved.

The foregoing is a brief summary of the material U.S. federal income tax consequences of the Stock Swap Merger and is qualified in its entirety by the more detailed general summary of the material U.S. federal income tax consequences of the transaction contained in “Part Five: The Stock Swap Merger—Tax Considerations.”

Selected Historical and Pro Forma Financial Data

Presentation of Financial Information

The following financial statements are included in this prospectus:

 

   

Newbev’s audited financial statements prepared in accordance with IFRS as of and for the years ended December 31, 2012 and 2011;

 

   

the audited combined financial statements of Newbev and all Ambev equity interests held by ABI -controlled entities, or the Newbev Predecessor combined financial statements, prepared in accordance with IFRS as of December 31, 2012 and 2011 and for the years ended December 31, 2012, 2011 and 2010. The Newbev Predecessor combined financial statements include the results of operations of Ambev and Newbev, using ABI’s accounting basis for its investment in Ambev. These financial statements will become the historical financial statements of Newbev after the Contribution, after giving retroactive effect in earnings per share to the number of Newbev common shares outstanding immediately after the Contribution. As such, the accompanying audited Newbev Predecessor combined financial statements include historical Ambev financial statements in addition to certain purchase accounting adjustments recognized by ABI, our ultimate parent, upon its acquisition of Ambev in 2004 and subsequent additional investments;

 

 

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Ambev’s audited consolidated financial statements prepared in accordance with IFRS as of December 31, 2012 and 2011 and for the years ended December 31, 2012, 2011 and 2010, which have been included in “Item 17. Financial Statements” of Ambev’s Annual Report on Form 20-F for the year ended December 31, 2012, or the 2012 Ambev 20-F, included as Annex A to this prospectus; and

 

   

Ambev’s unaudited consolidated interim financial statements prepared in accordance with IFRS as of March 31, 2013 and for the quarters ended March 31, 2013 and 2012.

As required under the Brazilian Corporation Law, following the Stock Swap Merger Newbev will also prepare parent company (individual) financial statements with accounting practices adopted in Brazil, or Brazilian GAAP, which are based on:

 

   

Brazilian Law No. 6,404/76, as amended by Brazilian Law No. 9,457/97, Brazilian Law No. 10,303/01, and Brazilian Law No. 11,638/07, which in this prospectus is also referred to collectively as the Brazilian Corporation Law;

 

   

the rules and regulations of the CVM, the accounting standards issued by the Brazilian Institute of Independent Accountants (Instituto dos Auditores Independentes do Brasil) and the Brazilian Federal Accounting Council (Conselho Federal de Contabilidade); and

 

   

the accounting standards issued by the Brazilian Accounting Standards Committee (Comitê de Pronunciamentos Contábeis).

Parent company (individual) financial statements for Newbev are statutorily required for certain purposes, the most relevant of which is the calculation of dividends. Newbev’s parent company (individual) financial statements in accordance with Brazilian GAAP will not be prepared for purposes of disseminating additional financial information on Newbev to investors. Brazilian GAAP, as will be applied in the preparation of Newbev’s parent company (individual) financial statements, differs from IFRS as issued by the IASB in that (1) Brazilian GAAP require presentation of a value added statement and (2) Brazilian GAAP require the application of the equity method of accounting in investments in associates and subsidiaries, while under IFRS as issued by the IASB these are recorded either at their cost or fair value.

Newbev maintain its books and records in reais. However, solely for the convenience of the reader, Newbev has translated certain amounts included in this section and elsewhere in this prospectus from reais into U.S. dollars using the selling rate as reported by the Central Bank of Brazil (Banco Central do Brasil), or the Central Bank, as of March 31, 2013 of R$2.014 to US$1.00 (or, where indicated, at an average exchange rate prevailing during a certain period). These translations should not be considered representations that any such amounts represent, or could have been or could be converted into, U.S. dollars at that or at any other exchange rate.

On June 26, 2013, the exchange rate for reais into U.S. dollars was R$2.198 to US$1.00, based on the selling rate as reported by the Central Bank. The selling rate was R$1.822 to US$1.00 as of March 31, 2012, R$2.044 to US$1.00 as of December 31, 2012, R$1.876 to US$1.00 as of December 31, 2011, and R$1.666 to US$1.00 as of December 31, 2010, in each case, as reported by the Central Bank. The real/U.S. dollar exchange rate fluctuates widely, and the selling rate as of June 26, 2013 may not be indicative of future exchange rates.

 

 

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Percentages and some amounts in this prospectus have been rounded for ease of presentation. As a result, numerical figures shown as totals in some tables may not be an arithmetic aggregation of the figures that precede them.

Newbev Selected Historical Financial Data

The selected historical financial data below is only a summary derived from Newbev’s audited financial statements as of and for the years ended December 31, 2012 and 2011. Newbev first adopted IFRS for the audited financial statements for the year ended December 31, 2012. Therefore, selected historical financial data is only presented for the fiscal years for which IFRS financial information is available. You should read the following selected historical financial data together with the audited financial statements of Newbev, related notes and other related financial information included herein.

Income Statement

 

     Year Ended December 31,  
     2012     2012     2011  
     (in US$ million)(1)     (in R$ million)  

Dividend income

     16.3        32.9        37.3   

Administrative expenses

     (0.4     (0.8     (0.7

Other operating expenses

     (0.3     (0.6     (1.2
  

 

 

   

 

 

   

 

 

 

Operating results

     15.6        31.5        35.4   

Financial costs

     -        -        (186.4

Financial income

     2.6        5.1        193.2   
  

 

 

   

 

 

   

 

 

 

Net financial cost

     2.6        5.1        6.8   
  

 

 

   

 

 

   

 

 

 

Income before tax

     18.2        36.7        42.3   

Income and social contribution income (expense)

     4.9        9.8        (3.6
  

 

 

   

 

 

   

 

 

 

Net income

     23.1        46.5        38.7   
  

 

 

   

 

 

   

 

 

 

 

  (1) Translated for the convenience of the reader only. See “—Presentation of Financial Information.” The exchange rate used for the translation from reais to U.S. dollars was R$2.014 per US$1.00 as of March 31, 2013.

 

 

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Balance Sheet

 

     As of December 31,      As of January 1,  
     2012      2012      2011      2011  
     (in US$ million)(1)             (in R$ million)         
ASSETS                            

Non-current assets:

           

Investments securities

     633.0         1,274.7         1,002.4         2,897.3   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

     633.0         1,274.7         1,002.4         2,897.3   

Current assets:

           

Taxes receivables

     1.0         2.0         2.6         3.4   

Trade and other receivables

     10.7         21.5         9.9         -   

Cash and cash equivalents

     23.9         48.2         69.5         7.3   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

     35.6         71.7         82.0         10.6   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total assets

     668.6         1,346.4         1,084.4         2,907.9   
  

 

 

    

 

 

    

 

 

    

 

 

 

EQUITY AND LIABILITIES

           

Equity:

           

Share capital

     123.7         249.1         249.1         249.1   

Reserves

     25.6         51.6         40.2         -   

Other results

     335.9         676.5         496.8         380.9   

Accumulated earnings

     -         -         14.1         26.3   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total equity

     485.2         977.2         800.2         656.3   

Liabilities:

           

Current liabilities:

           

Accounts payable

     15.0         30.3         27.9         76.2   

Income and social contribution taxes

     -         -         0.3         1.6   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total current liabilities

     15.0         30.3         28.3         77.8   

Non-current liabilities:

           

Interest-bearing loans and borrowings

        -         -         1,977.8   

Deferred tax liabilities

     168.4         338.8         255.9         196.0   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total non-current liabilities

     168.4         338.8         255.9         2,173.8   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total liabilities and shareholders’ equity

     168.4         1,346.4         1,084.4         2,907.9   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1) Translated for the convenience of the reader only. See “—Presentation of Financial Information.” The exchange rate used for the translation from reais to U.S. dollars was R$2.014 per US$1.00 as of March 31, 2013.

Predecessor Historical Selected Financial Data

The Newbev Predecessor historical combined selected financial data below is derived from the combined financial statements of ABI’s interest in Newbev and Ambev as of December 31, 2012 and 2011 and for the years ended December 31, 2012, 2011 and 2010. The Newbev Predecessor combined financial statements are the historical financial statements of Newbev after the Contribution, after giving retroactive effect in earnings per share to the number of Newbev common shares outstanding immediately after the Contribution. The Newbev Predecessor combined financial statements include the

 

 

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historical Ambev financial statements in addition to certain purchase accounting adjustments recognized by ABI, our ultimate parent company, upon its acquisition of Ambev in 2004 and subsequent additional investments. Accordingly, the Ambev selected financial data for 2009 and 2008 is the same information that is reflected in the Newbev Predecessor selected financial data for such years, except that it does not include the effects of purchase accounting recorded by ABI that is reflected in the Newbev Predecessor combined financial statements. Such purchase accounting adjustments had an immaterial effect on the Newbev Predecessor combined income statements. For further information on these purchase accounting adjustments, see Note 1 to the Newbev Predecessor combined financial statements included elsewhere in this prospectus. For selected financial data and more financial information on Ambev generally, see 2012 Ambev 20-F included as Annex A to this prospectus.

The Newbev Predecessor historical selected financial data for the years ended December 31, 2009 and 2008 has been omitted as information prepared comparable to the Newbev Predecessor combined financial statements is not readily available and cannot be provided without unreasonable effort or expense due to significant changes in the accounting department personnel, as well as system changes in subsequent periods. We believe that the omission of Newbev Predecessor financial information for the years ended December 31, 2009 and 2008 would not have a material impact on an investor’s understanding of our financial results and condition, cash flows and related trends. You should read the following selected historical financial data together with the audited Newbev Predecessor combined financial statements, related notes and other related financial information included herein.

Income Statement

 

     Year Ended December 31,  
     2012     2012     2011     2010  
     (in US$ million)(1)           (in R$ million)        

Net sales

     16,005.1        32,231.0        27,126.7        25,233.3   

Cost of sales

     (5,195.0     (10,461.6     (8,999.6     (8,682.2
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     10,810.1        21,769.4        18,127.1        16,551.1   

Sales and marketing expenses

     (3,648.0     (7,346.4     (6,250.6     (6,038.3

Administrative expenses

     (769.1     (1,548.9     (1,182.8     (1,204.5

Other operating (expenses) income

     428.7        863.4        783.2        624.7   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from operations before special items

     6,821.7        13,737.5        11,476.9        9,933.0   

Special items

     (25.0     (50.4     23.1        (150.8
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from operations

     6,796.7        13,687.1        11,500.0        9,782.2   

Financial costs

     (732.1     (1,474.4     (1,420.1     (1,336.2

Financial income

     331.1        666.8        958.8        1,018.4   
  

 

 

   

 

 

   

 

 

   

 

 

 

Financial results

     (401.0     (807.6     (461.3     (317.8

Share of results of associates

     0.2        0.5        0.5        0.2   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income tax

     6,395.9        12,880.0        11,039.2        9,464.6   

Income tax expense

     (1,160.5     (2,337.1     (2,445.1     (2,004.4
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     5,235.4        10,542.9        8,584.1        7,460.2   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(1) Translated for the convenience of the reader only. See “—Presentation of Financial Information.” The exchange rate used for the translation from reais to U.S. dollars was R$2.014 per US$1.00 as of March 31, 2013.

 

 

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Balance Sheet

 

     As of December 31,  
     2012      2012      2011  
     (in US$ million)(1)      (in R$ million)  

ASSETS

        

Current assets:

        

Investment securities

     236.7         476.6         193.4   

Inventories

     1,224.7         2,466.3         2,238.5   

Taxes receivable

     57.9         116.5         293.9   

Trade and other receivables

     2,119.4         4,268.1         3,875.3   

Cash and cash equivalents

     4,456.4         8,974.3         8,145.7   

Assets held for sale

     2.0         4.1         0.4   
  

 

 

    

 

 

    

 

 

 

Total current assets

     8,097.1         16,305.9         14,747.2   

Non-current assets:

        

Property, plant and equipment

     6,133.3         12,351.3         10,375.5   

Goodwill

     13,231.3         26,645.2         23,814.2   

Intangible assets

     1,458.0         2,936.1         1,912.8   

Investment in associates

     11.9         24.0         21.7   

Investment securities

     123.8         249.4         242.1   

Deferred tax assets

     709.2         1,428.2         1,447.1   

Employee benefits

     12.7         25.5         18.5   

Taxes receivable

     6.1         12.3         16.3   

Trade and other receivables

     921.1         1,855.0         1,232.0   
  

 

 

    

 

 

    

 

 

 

Total non-current assets

     22,607.4         45,527.0         39,080.2   
  

 

 

    

 

 

    

 

 

 

Total assets

     30,704.5         61,832.9         53,827.4   
  

 

 

    

 

 

    

 

 

 

NET INVESTMENT AND LIABILITIES

        

Current liabilities:

        

Bank overdrafts

     -         0.1         12.3   

Interest-bearing loans and borrowings

     416.0         837.8         2,212.1   

Income tax and social contribution payable

     483.0         972.6         793.9   

Trade and other payables

     6,743.1         13,579.3         11,302.1   

Provisions

     68.3         137.5         101.6   
  

 

 

    

 

 

    

 

 

 

Total current liabilities

     7,710.4         15,527.3         14,422.0   

Non-current liabilities:

        

Interest-bearing loans and borrowings

     1,145.1         2,306.0         1,890.2   

Employee benefits

     884.3         1,780.9         1,602.9   

Deferred tax liabilities

     679.2         1,367.7         1,112.0   

Trade and other payables

     1,521.4         3,063.9         1,196.6   

Provisions

     257.3         518.1         478.4   
  

 

 

    

 

 

    

 

 

 

Total non-current liabilities

     4,487.3         9,036.6         6,280.1   

Shareholders’ net investment:

        

Majority owner net investment

     12,512.0         25,198.6         23,089.6   

Noncontrolling interests

     5,993.0         12,070.4         10,035.7   
  

 

 

    

 

 

    

 

 

 

Total shareholders’ net investment

     18,506.8         37,269.0         33,125.3   
  

 

 

    

 

 

    

 

 

 

Total liabilities and shareholders’ net investment

     30,704.5         61,832.9         53,827.4   
  

 

 

    

 

 

    

 

 

 

 

  (1) Translated for the convenience of the reader only. See “—Presentation of Financial Information.” The exchange rate used for the translation from reais to U.S. dollars was R$2.014 per US$1.00 as of March 31, 2013.

 

 

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Ambev Selected Historical Interim Financial Data

The selected historical interim financial data below is only a summary derived from Ambev’s unaudited consolidated interim financial statements as of March 31, 2013 and for the quarters ended March 31, 2013 and 2012. You should read the following selected historical financial data together with the consolidated interim financial statements and other related financial information included herein.

Income Statement

 

     Quarter Ended March 31,  
     2013     2013     2012  
     (in US$ million)(1)     (in R$ million)  

Net sales

     3,859.8        7,772.8        7,235.7   

Cost of sales

     (1,302.4     (2,622.8     (2,312.4
  

 

 

   

 

 

   

 

 

 

Gross profit

     2,557.4        5,150.0        4,923.3   

Sales and marketing expenses

     (987.6     (1,988.9     (1,748.4

Administrative expenses

     (174.7     (351.7     (317.2

Other operating (expenses) income

     155.7        313.5        139.2   
  

 

 

   

 

 

   

 

 

 

Income from operations before special items

     1,550.8        3,122.9        2,996.9   

Special items

     (0.5     (1.0     -   
  

 

 

   

 

 

   

 

 

 

Income from operations

     1,550.3        3,121.9        2,996.9   

Financial costs

     (199.3     (401.4     (290.6

Financial income

     79.8        160.7        207.9   
  

 

 

   

 

 

   

 

 

 

Financial results

     (119.5     (240.7     (82.7

Share of results of associates

     0.8        1.7        0.4   
  

 

 

   

 

 

   

 

 

 

Income before income tax

     1,431.6        2,882.9        2,914.6   

Income tax expense

     (251.4     (506.4     (580.1
  

 

 

   

 

 

   

 

 

 

Net income

     1,180.2        2,376.5        2,334.5   
  

 

 

   

 

 

   

 

 

 

 

  (1) Translated for the convenience of the reader only. See “—Presentation of Financial Information.” The exchange rate used for the translation from reais to U.S. dollars was R$2.014 per US$1.00 as of March 31, 2013.

 

 

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Table of Contents

Balance Sheet

 

     As of March 31,      As of December 31,  
     2013      2013      2012
(audited)
 
     (in US$ million)(1)      (in R$ million)  

ASSETS

        

Non-current assets:

        

Property, plant and equipment

     5,621.9         11,321.3         11,412.3   

Goodwill

     9,771.7         19,678.7         19,971.5   

Intangible assets

     1,440.3         2,900.5         2,935.4   

Investment in associates

     12.2         24.5         24.0   

Investment securities

     118.9         239.5         249.4   

Deferred tax assets

     889.3         1,790.8         1,418.5   

Employee benefits

     12.7         25.5         25.5   

Taxes receivable

     5.4         10.8         12.3   

Trade and other receivables

     918.8         1,850.6         1,855.0   
  

 

 

    

 

 

    

 

 

 

Total non-current assets

     18,791.4         37,842.2         37,903.9   

Current assets:

        

Investment securities

     178.6         359.6         476.6   

Inventories

     1,425.8         2,871.2         2,466.3   

Taxes receivable

     96.9         195.2         114.5   

Trade and other receivables

     1,882.6         3,791.0         4,268.3   

Cash and cash equivalents

     1,820.1         3,665.3         8,926.2   

Assets held for sale

     2.0         4.0         4.1   
  

 

 

    

 

 

    

 

 

 

Total current assets

     5,406.0         10,886.3         16,256.0   
  

 

 

    

 

 

    

 

 

 

Total assets

     24,197.4         48,728.5         54,159.9   
  

 

 

    

 

 

    

 

 

 

EQUITY AND LIABILITIES

        

Equity:

        

Issued capital

     6,321.6         12,730.5         12,187.3   

Reserves

     6,950.6         13,997.1         16,676.4   

Retained earnings

     973.3         1,959.9         -   
  

 

 

    

 

 

    

 

 

 

Equity attributable to equity holders of Ambev

     14,245.5         28,687.5         28,863.7   

Noncontrolling interests

     526.2         1,059.7         1,060.1   
  

 

 

    

 

 

    

 

 

 

Total equity

     14,771.7         29,747.2         29,923.8   

Non-current liabilities:

        

Interest-bearing loans and borrowings

     1,065.3         2,145.4         2,306.0   

Employee benefits

     864.9         1,741.7         1,780.9   

Deferred tax liabilities

     538.8         1,085.0         1,048.3   

Trade and other payables

     1,450.4         2,920.5         3,064.0   

Provisions

     247.4         498.3         518.1   
  

 

 

    

 

 

    

 

 

 

Total non-current liabilities

     4,166.8         8,390.9         8,717.3   

Current liabilities:

        

Bank overdrafts

     -         -         0.1   

Interest-bearing loans and borrowings

     423.5         852.8         837.8   

Income tax and social contribution payable

     591.0         1,190.2         972.6   

Trade and other payables

     4,176.9         8,411.5         13,570.8   

Provisions

     67.5         135.9         137.5   
  

 

 

    

 

 

    

 

 

 

Total current liabilities

     5,258.9         10,590.4         15,518.8   
  

 

 

    

 

 

    

 

 

 

Total liabilities

     9,425.7         18,981.3         24,236.1   
  

 

 

    

 

 

    

 

 

 

Total equity and liabilities

     24,197.4         48,728.5         54,159.9   
  

 

 

    

 

 

    

 

 

 

 

  (1) Translated for the convenience of the reader only. See “—Presentation of Financial Information.” The exchange rate used for the translation from reais to U.S. dollars was R$2.014 per US$1.00 as of March 31, 2013.

 

 

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Table of Contents

Newbev Unaudited Pro Forma Condensed Consolidated Financial Information under IFRS

The following unaudited pro forma condensed consolidated financial information of Newbev give pro forma effect to: (1) the Contribution, pursuant to which on June 17, 2013 ABI caused its subsidiaries IIBV and AmBrew to contribute to Newbev all the Ambev shares that those entities held in Ambev (for further information, see “—The Contribution”), and (2) the Stock Swap Merger, pursuant to which each Ambev common or preferred share not held by Newbev will be exchanged for five newly issued Newbev common shares, if the transaction is approved by the required shareholder vote (for further information, see “—Terms of the Stock Swap Merger” appearing elsewhere in this prospectus).

The unaudited pro forma condensed consolidated balance sheet as of December 31, 2012 is based on the individual IFRS historical balance sheets of Newbev and Ambev, appearing elsewhere in this prospectus, and give effect on a pro forma basis to the Contribution and the Stock Swap Merger as if both transactions had been consummated on December 31, 2012. The unaudited pro forma condensed consolidated income statement for the years ended December 31, 2012 and 2011 are based on the individual IFRS historical statements of operations of Newbev and Ambev, appearing elsewhere in this prospectus, and include the results of operations of Newbev and Ambev giving effect to the Contribution as if it had occurred on January 1, 2011. Pro forma effect for two years is given to the Contribution as it represents a transfer between entities under common control that will be accounted for retroactively using the predecessor value method. Additionally, the unaudited pro forma condensed income statement for the year ended December 31, 2012 gives further pro forma effect to the Stock Swap Merger, as if it had occurred on January 1, 2012. The historical financial information has been adjusted to give effect to events: (1) that are directly attributable to the Contribution and Stock Swap Merger, (2) that are factually supportable, and (3) with respect to the pro forma income statements, that are expected to have a continuing impact on the consolidated results.

This information should be read in conjunction with the historical financial statements and accompanying notes of Newbev and the historical consolidated financial statements and accompanying notes of Ambev included elsewhere in this document.

The unaudited pro forma condensed consolidated financial information is based on the estimates and assumptions set forth in the notes to such information. The unaudited pro forma condensed consolidated financial information is being furnished solely for informational purposes. Although we believe that the unaudited pro forma condensed consolidated financial information is presented based on reasonable assumptions of our management, you should not interpret them as our actual results of operations, as an indication of our future consolidated results, as a basis for the calculation of dividends or for any other purposes. The unaudited pro forma condensed consolidated financial information is provided for illustrative purposes only and does not purport to represent what the actual consolidated results of operations or the consolidated financial position of Newbev would have been if the Contribution or the Stock Swap Merger had occurred on the dates assumed. The unaudited pro forma financial information, for example, does not reflect any integration costs that may be incurred as a result of the Contribution or the Stock Swap Merger.

 

 

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Table of Contents

Unaudited Pro Forma Condensed Consolidated Balance Sheet

 

     As of December 31, 2012  
           Pro Forma Adjustments      
     Newbev
Historical
    Ambev
Historical
    Consolidation
Adjustments
    ABI
Predecessor
Basis of
Accounting
Adjustments
    Predecessor
Basis of
Accounting
    Stock
Swap
Merger
  Consolidated
Pro Forma
 

ASSETS

     (in R$ million)   

Non-current assets:

              

Property, plant and equipment

     -        11,412.3        -        939.0 2(ii)(a)      12,351.3      -     12,351.3   

Goodwill

     -        19,971.4        -        6,674.5 2(ii)(b)      26,645.9      -     26,645.9   

Intangible assets

     -        2,935.4        -        -        2,935.4      -     2,935.4   

Investments in associates

     1,274.7        24.0        (1,274.7 )2(i)(a)      -        24.0      -     24.0   

Investment securities

     -        249.4        -        -        249.4      -     249.4   

Deferred tax assets

     9.7        1,418.5        -        -        1,428.2      -     1,428.2   

Employee benefits

     -        25.5        -        -        25.5      -     25.5   

Taxes receivable

     -        12.3        -        -        12.3      -     12.3   

Trade and other receivables

     -        1,855.0        -        -        1,855.0      -     1,855.0   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

 

Total non-current assets

     1,284.4        37,903.8        (1,274.7     7,613.5        45,527.0      -     45,527.0   

Current assets:

              

Investment securities

     -        476.6        -        -        476.6      -     476.6   

Inventories

     -        2,466.3        -        -        2,466.3      -     2,466.3   

Taxes receivable

     2.0        114.5        -        -        116.5      -     116.5   

Trade and other receivables

     21.5        4,268.3        (21.7 )2(i)(b)      -        4,268.1      -     4,268.1   

Cash and cash equivalents

     48.2        8,926.1        -        -        8,974.3      -     8,974.3   

Assets held for sale

     -        4.1        -        -        4.1      -     4.1   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

 

Total current assets

     71.7        16,255.9        (21.7     -        16,305.9      -     16,305.9   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

 

Total assets

     1,356.1        54,159.7        (1,296.4     7,613.5        61,832.9      -     61,832.9   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

 

EQUITY AND LIABILITIES

              

Equity:

              

Equity attributable to equity holders of Newbev

     977.2        28,863.9        (11,936.6 )2(i)(c)      7,294.1 2(ii)(c)      25,198.6      11,010.4  2(iii)(a)     36,209.0   

Noncontrolling interests

     -        1,060.0        11,010.4  2(i)(d)      -        12,070.4      (11,010.4)2(iii)(b)     1,060.0   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

 

Total equity

     977.2        29,923.9        (926.2     7,294.1        37,269.0      -     37,269.0   

Liabilities:

              

Non-current liabilities:

              

Interest-bearing loans and borrowings

     -        2,306.0        -        -        2,306.0        -       2,306.0   

Employee benefits

     -        1,780.9        -        -        1,780.9      -     1,780.9   

Deferred tax liabilities

     348.5        1,048.3        (348.5 )2(i)(e)      319.4 2(ii)(d)      1,367.7      -     1,367.7   

Trade and other payables

     -        3,063.9        -        -        3,063.9      -     3,063.9   

Provisions

     -        518.1        -        -        518.1      -     518.1   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

 

Total non-current
liabilities

     348.5        8,717.2        (348.5     319.4        9,036.6      -     9,036.6   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

 

Current liabilities:

  

Bank overdrafts

     -        0.1        -        -        0.1      -     0.1   

Interest-bearing loans

     -        837.8        -        -        837.8      -     837.8   

Income tax and social contribution payable

     -        972.6        -        -        972.6      -     972.6   

Trade and other payables

     30.4        13,570.6        (21.7 )2(i)(b)      -        13,579.3      -     13,579.3   

Provisions

     -        137.5        -        -        137.5      -     137.5   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

 

Total current liabilities

     30.4        15,518.6        (21.7     -        15,527.3      -     15,527.3   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

 

Total liabilities

     378.9        24,235.8        (370.2     319.4        24,563.9      -     24,563.9   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

 

Total liabilities and shareholders’ equity

     1,356.1        54,159.7        (1,296.4     7,613.5        61,832.9      -     61,832.9   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

 

 

 

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Table of Contents

Unaudited Pro Forma Condensed Consolidated Income Statement

 

    Year Ended December 31, 2012  
                Pro Forma Adjustments        
    Newbev
Historical
    Ambev
Historical
    Consolidation
Adjustments
    ABI
Predecessor
Basis of
Accounting
Adjustments
    Predecessor
Basis of
Accounting
    Stock
Swap
Merger
    Consolidated
Pro Forma
 
    (in R$ million, except as indicated otherwise)  

Net sales

      -          32,231.0          -          -        32,231.0          -          32,231.0   

Cost of sales

      -          (10,291.6     -        (170.0 )3(ii)(a)      (10,461.6     -        (10,461.6 ) 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

    -        21,939.4        -        (170.0     21,769.4        -        21,769.4   

Sales and marketing expenses

      -          (7,346.6       -          0.2   3(ii)(a)      (7,346.4     -        (7,346.4 ) 

Administrative expenses

    (0.8     (1,546.6     -        (1.5 )3(ii)(a)      (1,548.9     -        (1,548.9 ) 

Other operating (expenses) income

    32.4        863.9        (32.9 )3(i)(a)      -        863.4        -        863.4   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income from operations before special items

    31.6        13,910.1        (32.9     (171.3     13,737.5        -        13,737.5   

Special items

      -          (50.4     -        -        (50.4     -        (50.4 ) 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income from operations

    31.6        13,859.7        (32.9     (171.3     13,687.1        -        13,687.1   

Financial costs

    -        (1,474.4     -        -        (1,474.4     -        (1,474.4 ) 

Financial income

    5.1        661.7        -        -        666.8        -        666.8   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Financial results

    5.1        (812.7     -        -        (807.6     -        (807.6

Share of results of associates

    -        0.5        -        -        0.5        -        0.5   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before income
tax

    36.7        13,047.5        (32.9     (171.3     12,880.0        -        12,880.0   

Income tax expense

    9.8        (2,405.1     -        58.2   3(ii)(b)      (2,337.1     -        (2,337.1 ) 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

    46.5        10,642.4        (32.9     (113.1     10,542.9        -        10,542.9   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Attributable to:

             

Equity holders of Newbev

    46.5        10,508.1        (4,041.5 )3(i)(b)      (113.1     6,400.0        4,008.4   3(iii)(a)      10,408.4   

Noncontrolling interest

    -        134.5        4,008.4   3(i)(b)      -        4,142.9        (4,008.4 )3(iii)(a)      134.5   

Earnings per share:3(iv)

             

Basic (common shares)

    0.19              0.66          0.66   

Diluted (common shares)

    0.19              0.66          0.66   

Weighted average number of shares (thousand shares):3(iv)

             

Basic (common shares)

    249,061            9,444,537   3(iv)      9,693,598        5,967,838   3(iv)      15,661,436   

Diluted (common shares)

    249,061            9,444,537   3(iv)      9,693,598        5,967,838   3(iv)      15,661,436   

 

 

41


Table of Contents
     Year Ended December 31, 2011  
                 Pro Forma Adjustments        
     Newbev
Historical
    Ambev
Historical
    Consolidation
Adjustments
    ABI
Predecessor
Basis of
Accounting
Adjustments
    Consolidated
Pro Forma
 
     (in R$ million, except as indicated otherwise)  

Net sales

     -        27,126.7        -        -        27,126.7   

Cost of sales

     -        (8,793.3     -        (206.3 )3(ii)(a)      (8,999.6
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     -        18,333.4        -        (206.3     18,127.1   

Sales and marketing expenses

     -        (6,250.9     -        0.3   3(ii)(a)      (6,250.6

Administrative expenses

     (0.7     (1,180.6     -        (1.5 )3(ii)(a)      (1,182.8

Other operating (expenses) income

     36.1        784.4        (37.3 )3(i)(a)      -        783.2   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income from operations before special items

     35.4        11,686.3        (37.3     (207.5     11,476.9   

Special items

     -        23.1        -        -        23.1   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income from operations

     35.4        11,709.4        (37.3     (207.5     11,500.0   

Financial costs

     (186.4     (1,233.7     -        -        (1,420.1

Financial income

     193.2        765.6        -        -        958.8   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Financial results

     6.8        (468.1     -        -        (461.3

Share of results of associates

     -        0.5        -        -        0.5   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before income tax

     42.2        11,241.8        (37.3     (207.5     11,039.2   

Income tax expense

     (3.6     (2,522.0     -        70.5   (3ii)(b)      (2,455.1
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     38.6        8,719.8        (37.3     (137.0     8,584.1   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Attributable to:

          

Equity holders of Newbev

     38.7        8,641.0        (3,330.6 )3(i)(b)      (137.0     5,212.1   

Noncontrolling interest

     -        78.8        3,293.3  3(i)(b)      -        3,3721.1   

Earnings per share:3(iv)

          

Basic (common shares)

     0.16              0.54   

Diluted (common shares)

     0.16              0.54   

Weighted average number of shares (thousand shares):3(iv)

          

Basic (common shares)

     249,061            9,444,537 3(iv)      9,693,598   

Diluted (common shares)

     249,061            9,444,537 3(iv)      9,693,598   

 

1. Description of the Contribution and Stock Swap Merger and Basis of Presentation

 

(i) The Contribution

On June 17, 2013, IIBV and AmBrew, two wholly-owned subsidiaries of ABI, contributed to Newbev the Ambev shares owned by them. As a consequence, Newbev became Ambev’s direct controlling shareholder, holding a 74.0% and 46.3% interest in the Ambev common shares and preferred shares, respectively. The Contribution has been accounted for as a combination of entities under common control using the predecessor value method. Under the predecessor value method, the book values used to record assets and liabilities are those in the consolidated financial statements of ABI, the ultimate parent or the highest level of common control where consolidated financial statements are prepared (i.e., ABI accounting basis). As a result of the completion of the Contribution, the consolidated financial position and results of operations of Newbev include the historical Ambev financial statements in addition to certain purchase accounting adjustments recognized by ABI, our ultimate parent company, upon its acquisition of Ambev in 2004 and subsequent additional investments.

 

 

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(ii) The Stock Swap Merger

Pursuant to the Stock Swap Merger, all issued and outstanding common and preferred shares of Ambev not held by Newbev will be exchanged for five new common shares, no par value, of Newbev, if the transaction is approved by the required shareholder vote. This exchange of shares will be considered a transaction with noncontrolling interests that does not result in the loss of control, and will be accounted for as an equity transaction.

 

2. Unaudited Pro Forma Balance Sheet Adjustments

 

(i) Consolidation Adjustments

(a)    Investment

The purpose of this adjustment is to eliminate the 0.5% ownership interest in Ambev originally owned by Newbev, which had been accounted for as an investment in Newbev’s historical financial statements.

(b)    Intercompany Balances

The purpose of this adjustment is to eliminate intercompany receivables and payables between Newbev and Ambev as of December 31, 2012.

(c)    Equity

The purpose of this adjustment is: (1) to eliminate R$1,274.7 million of Ambev’s equity related to the investment recorded in Newbev’s historical financial statements as referred to in (2)(i)(a) above, (2) to eliminate R$348.5 million in deferred taxes recognized in historical retained earnings of Newbev as referred to in (2)(i)(e) below, and (3) to recognize R$11,010.4 million in noncontrolling interests in Ambev after the Contribution, representing the interest in Ambev that is not owned by Newbev.

(d)    Noncontrolling Interests

The purpose of this adjustment is to recognize R$11,010.4 million, equivalent to the 38.2% noncontrolling interest in Ambev after the Contribution, representing the interest in Ambev that is not owned by Newbev, as referred to in (2)(i)(c) above.

(e)    Deferred Tax Liabilities

The purpose of this adjustment is to eliminate deferred tax liabilities recognized as a result of the changes in the fair value of the investment in Ambev held by Newbev referred in 2(i)(a) above.

 

(ii) ABI Predecessor Basis of Accounting Adjustments

The purpose of these adjustments is to reflect certain business combination adjustments recognized by ABI, the ultimate parent, upon its business acquisition of Ambev in 2004 and subsequent additional investments, due to the application of the predecessor value method of accounting, as follows:

(a)    Property, Plant and Equipment

The purpose of these adjustments is to recognize R$939.0 million from the difference between the book value and fair value of property, plant and equipment recognized in ABI’s consolidated financial statements.

 

 

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(b)    Goodwill

The purpose of these adjustments is to recognize R$6,674.5 million in goodwill recorded in ABI’s consolidated financial statements.

(c)    Equity

The purpose of these adjustments is to recognize R$7,294.1 million related to the total effect of the purchase accounting adjustments, as referred in (2)(ii)(a) and (2)(ii)(b) above, recognized as a result of the application of the predecessor value method of accounting.

(d)    Deferred Tax Liabilities

The purpose of these adjustments is to recognize the deferred tax effect on the adjustments above.

 

(iii) Stock Swap Merger Adjustments

(a)    Equity

The purpose of this adjustment is to recognize the net amount of R$11,010.4 million related to the issuance of new Newbev common shares that will be exchanged for the Ambev common and preferred shares not owned by Newbev that will be surrendered to Newbev by Ambev’s other shareholders.

(b)    Noncontrolling Interests

The purpose of this adjustment is to eliminate the noncontrolling interests in Ambev, as it will become a wholly-owned subsidiary of Newbev as a result of the Stock Swap Merger. The remaining balance of noncontrolling interests is related to subsidiaries not wholly-owned by Ambev.

 

3. Unaudited Pro Forma Income Statement Adjustments

 

(i) Consolidation Adjustments

(a)    Other Operating (Expenses) Income

The purpose of this adjustment is to eliminate dividend income recognized by Newbev derived from its investment in Ambev in the amount of R$32.9 million and R$37.3 million for the years ended December 31, 2012 and 2011, respectively.

(b)    Net Income Attributable to Equity Holders of Newbev and to Noncontrolling Interest

The purpose of this adjustment is to record net income attributable to noncontrolling shareholders of Ambev.

 

(ii) ABI Predecessor Basis of Accounting Adjustments

The purpose of these adjustments is to reflect the impact in the pro forma income statements the purchase accounting adjustments detailed above in the preamble of 2(ii) above.

 

 

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(a)    Cost of Sales; Sales and Marketing Expenses; Administrative Expenses

The purpose of this adjustment is to adjust depreciation expense of property, plant and equipment resulting from the adjustment to fair value referred to in 2(ii)(a) above.

(b)    Income Tax Expense

The purpose of this adjustment is to recognize the deferred tax effect on the adjustment referred to in (3)(ii)(a) above.

 

(iii) Stock Swap Merger Adjustments

(a)    Net Income Attributable to Equity Holders of Newbev and to Noncontrolling Interest

The purpose of this adjustment is to eliminate the noncontrolling interests in Ambev, as it will become a wholly-owned subsidiary of Newbev as a result of the Stock Swap Merger. The remaining balance of noncontrolling interests is related to subsidiaries not wholly-owned by Ambev.

 

(iv) Earnings Per Share

Predecessor Basis of Accounting

The pro forma number of shares is adjusted to reflect the number of Newbev common shares that Newbev had outstanding after the Contribution, at which point in time Newbev was indirectly wholly-owned by ABI through ABI’s direct subsidiaries IIBV and AmBrew. Such shares have no par value and have been issued for a total amount equivalent to the foreign capital investment amount that IIBV and AmBrew held in Ambev at the date of the Contribution, as registered with the Central Bank. The Contribution and concurrent reverse stock-split undertaken by Newbev resulted in a total number of 9,693,597,815 shares of Newbev common stock being outstanding. This represents an increase of 9,444,536,513 in the weighted average number of Newbev common shares compared to the historical number of shares of Newbev during the years ended December 31, 2012 and 2011.

Consolidated Pro Forma

The pro forma number of shares is adjusted to reflect the estimated number of Newbev common shares that Newbev will have outstanding after the Stock Swap Merger. The number of Newbev common shares following the consummation of the Stock Swap Merger was considered to be equal to five times the total number of shares of Ambev not taking into account any Ambev treasury shares. The Stock Swap Merger would then result in a total number of 15,661,436,120 shares of Newbev common stock being outstanding. This represents an increase of 5,967,838,305 in the weighted average number of shares compared to the predecessor basis of accounting number of shares for the year ended December 31, 2012.

Historical and Pro Forma Share Information

Historical Share Information

Newbev is an unlisted company and its common shares have never been listed on the BM&FBOVESPA or on any other securities exchange. Therefore, there is no reported trading price of its shares.

The Ambev common ADSs and Ambev preferred ADSs are listed on the NYSE under the symbols “ABV.c” and “ABV,” respectively. In addition, the Ambev common shares and Ambev preferred shares are listed on the BM&FBOVESPA under the symbols “AMBV3” and “AMBV4,” respectively.

 

 

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The table below sets forth the high and low sale prices of Ambev common and preferred ADSs, as reported on the NYSE, and of the Ambev common and preferred shares, as reported on the BM&FBOVESPA, in each case on a historical basis, on December 6, 2012, the last trading day prior to the first public announcement of the transaction with the Material Fact Notice issued by Ambev on December 7, 2012, and on June 26, 2013, the last practicable trading day before the date of this prospectus.

 

     December 6, 2012      June 26, 2013  
         High              Low          High      Low  

Ambev common shares (R$)

     78.27         77.05         78.99         76.51   

Ambev preferred shares (R$)

     88.25         86.92         79.88         77.91   

Ambev common ADSs (US$)

     37.63         37.17         36.00         35.08   

Ambev preferred ADSs (US$)

     42.43         41.69         36.44         35.60   

 

Source: BM&FBOVESPA (shares); Bloomberg (ADSs).

We urge you to check current market quotations.

Unaudited Pro Forma Share Information

After the transfer of ABI’s equity interests in Ambev to Newbev in the Contribution in exchange for newly issued Newbev common shares, the Newbev Predecessor combined financial statements became the historical consolidated financial statements of Newbev, except that the number of shares that ABI will hold in Newbev immediately after the Contribution will be retroactively reflected in historical earnings per share. The following table sets forth certain unaudited pro forma earnings per share for each of the years ended December 31, 2012, 2011 and 2010 for Newbev on a predecessor basis. These pro forma earnings per share amounts are the historical earnings per share amounts of Newbev after the Contribution.

The pro forma number of Newbev common shares is the number of common shares that Newbev had outstanding after the Contribution, at which point in time Newbev was indirectly wholly-owned by ABI through ABI’s direct subsidiaries IIBV and AmBrew. Such shares have no par value and have been issued for a total amount equivalent to the foreign capital investment amount that IIBV and AmBrew held in Ambev at the date of the Contribution, as registered with the Central Bank. The Contribution and concurrent reverse stock-split undertaken by Newbev resulted in a total number of 9,693,597,815 shares of Newbev common stock being outstanding (for further information on the reverse stock-split, see “—The Contribution”).

 

 

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The historical financial information for Newbev on a predecessor basis and Ambev has been prepared under IFRS. The information that follows should be read together with the audited Newbev Predecessor combined financial statements included elsewhere in this prospectus.

 

Pro Forma Earnings Per Share
     Year Ended December 31,
     2012   2011   2010
     (in R$ million, except as indicated otherwise)

Net income attributable to equity holders of Newbev

       6,400 .2       5,212 .2       4,516 .2

Number of common shares of Newbev outstanding after the Contribution (thousand shares)

       9,693,598         9,693,598         9,693,598  

Basic earnings per share (in R$)

       0 .66       0 .54       0 .47

Diluted earnings per share (in R$)

       0 .66       0 .54       0 .47

In addition, we have disclosed in the tables set forth below Newbev’s pro forma net income per share, book value per share and dividends per share for the year ended December 31, 2012, which gives pro forma effect to the Stock Swap Merger.

 

Pro Forma Net Income Per Share Giving Effect to the Stock Swap Merger for the Year Ended December 31, 2012
     Pro Forma Net
Income Per Share
After the
Contribution
  Pro Forma
Adjustments for
the Stock Swap
Merger(1)
  Pro Forma Net
Income Per Share
After the Stock
Swap Merger
     (in R$ million, except as indicated otherwise)

Predecessor Newbev net income attributable to equity holders of Newbev

       6,400 .2       4,008 .4       10,408 .6

Estimated number of common shares of Newbev as a result of the Contribution and the Stock Swap Merger (thousand shares)

       9,693,598         5,967,838         15,661,436  

Pro forma net income per common share (in R$)

       0 .66       -         0 .66

 

  (1) Majority owners’ net income is adjusted to include the noncontrolling interest net income in relation to Ambev.

 

Pro Forma Book Value Per Share Giving Effect to the Stock Swap Merger as of December 31, 2012
     Pro Forma Book
Value Per Share
After the
Contribution
  Pro Forma
Adjustments for
the Stock Swap
Merger(1)
  Pro Forma Book
Value Per Share
After the Stock
Swap  Merger
     (in R$ million, except as indicated otherwise)

Book value attributable to equity holders of Newbev

       25,198 .6       11,010 .3       36,208 .9

Estimated number of common shares of Newbev as a result of the Contribution and the Stock Swap Merger (thousand shares)

       9,693,598         5,967,838         15,661,436  

Pro forma book value per share (in R$)

       2 .60       (0 .29)       2 .31

 

  (1) Majority owners’ book value is adjusted to include the noncontrolling interest book value in relation to Ambev.

 

 

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Pro Forma Cash Dividends Per Share Giving Effect to the Stock Swap Merger for the Year Ended December 31, 2012
     Pro Forma Cash
Dividends Per
Share After

the Contribution(1)
  Pro Forma
Adjustments for
the Stock Swap
Merger(2)
  Pro Forma Cash
Dividends Per Share
After the Stock
Swap  Merger
     (in R$ million, except as indicated otherwise)

Cash dividends attributable to equity holders of Newbev

       4,945 .1       3,073 .2       8,018 .3

Estimated number of common shares of Newbev as a result of the Contribution and the Stock Swap Merger (thousand shares)

       9,693,598         5,967,838         15,661,436  

Pro forma cash dividends per share (in R$)

       0 .51       -         0 .51

 

  (1) Pro forma cash dividends per share after the Contribution have been determined by considering the total cash dividends paid by Newbev and Ambev to ABI, which are considered to be the dividends received by ABI from the Newbev Predecessor, divided by the number of Newbev common shares held by ABI immediately after the Contribution.
  (2) Majority owners’ cash dividends are adjusted to include the noncontrolling interest cash dividends in relation to Ambev.

In addition, we have disclosed in the table set forth below (1) the pro forma net income and book value per share of the Newbev Predecessor common stock after the Contribution in comparison to the pro forma net income and book value per share after giving effect to the proposed Stock Swap Merger, (2) the historical net income and book value per share of Ambev’s common stock and preferred stock in comparison to the equivalent pro forma net income and book value per share attributable to five shares of Newbev common stock that will be issued in exchange for each Ambev common or preferred share surrendered, (3) the pro forma cash dividends per share of the Newbev Predecessor common stock after the Contribution in comparison to the pro forma Newbev Predecessor dividends per share after giving effect to the proposed Stock Swap Merger, and (4) the actual cash dividends per share of Ambev common stock and preferred stock in comparison to the equivalent pro forma cash dividends paid on each share of Newbev Predecessor common stock after giving effect to the proposed Stock Swap Merger.

 

    Newbev   Ambev
    Pro Forma
Newbev After the
Contribution(1)
  Pro Forma
Newbev After the
Stock Swap
Merger(2)
  Historical   Equivalent Pro
Forma(2)
    (in R$)

Net Income:

               

Net income per common share

      0 .66       0 .66       3 .22       3 .32

Net income per preferred share

      -         -         3 .55       3 .32

Book Value:

               

Book value per common share

      2 .60       2 .31       9 .24       11 .56

Book value per preferred share

      -         -         9 .24       11 .56

Dividends:

               

Cash dividends per common share

      0 .51       0 .51       2 .44       2 .56

Cash dividends per preferred share

      -         -         2 .69       2 .56

 

  (1) Amounts will become the historical per share data of Newbev after the Contribution.
  (2) Pro forma amounts of Newbev after the Contribution multiplied by the Stock Swap Merger’s exchange ratio of five new Newbev common shares issued in exchange for each Ambev common or preferred share surrendered.

 

 

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Exchange Rates

Since March 2005, with the issuance of Resolution No. 3,265 by the National Monetary Council (Conselho Monetário Nacional), or the CMN, all foreign exchange transactions in Brazil are carried out through institutions authorized to operate in the consolidated market and are subject to registration with the electronic registration system of the Central Bank. Foreign exchange rates continue to be freely negotiated, but may be influenced by Central Bank intervention.

Since 1999, the Central Bank has allowed the real/U.S. dollar exchange rate to float freely, and during that period the real/U.S. dollar exchange rate has fluctuated considerably. In the past, the Central Bank has intervened occasionally to control unstable movements in foreign exchange rates. We cannot predict whether the Central Bank or the Brazilian federal government will continue to let the real float freely or will intervene in the foreign exchange rate market through a currency band system or otherwise. The real may depreciate or appreciate against the U.S. dollar substantially in the future. See “Item 3D. Risk Factors—Risks Relating to Brazil” of the 2012 Ambev 20-F included as Annex A to this prospectus.

The following table sets forth the selling exchange rate, expressed in reais per U.S. dollar, for the periods indicated. The information in the “Average” column represents the average of the exchange rates on the last day of each month during the periods presented.

 

     Reais per U.S. Dollar  

Year

   High      Low      Average      Period End  

2008

     2.500         1.559         1.834         2.337   

2009

     2.422         1.702         1.994         1.741   

2010

     1.881         1.655         1.756         1.666   

2011

     1.902         1.535         1.677         1.876   

2012

     2.112         1.702         1.955         2.044   

 

Source: Central Bank.

 

         Reais per U.S. Dollar      

Month

   High      Low  

December 2012

     2.112         2.044   

January 2013

     2.047         1.988   

February 2013

     1.989         1.957   

March 2013

     2.019         1.953   

April 2013

     2.024         1.974   

May 2013

     2.132         2.003   

June 2013 (through June 26)

     2.265         2.124   

 

Source: Central Bank.

Newbev will pay cash dividends and make other cash distributions to its shareholders in reais. Accordingly, exchange rate fluctuations may affect the U.S. dollar amounts received by holders of Newbev ADSs on conversion by the Depositary of those distributions into U.S. dollars for payment to those holders. Fluctuations in the exchange rate between the real and the U.S. dollar may also affect the U.S. dollar equivalent of the trading price of the Newbev common shares in reais on the BM&FBOVESPA.

 

 

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PART THREE: RISK FACTORS

In addition to the other information contained in this document, including the matters described in the caption “Cautionary Statement Regarding Forward-Looking Statements,” you should carefully consider the following factors to understand the risks associated with the Stock Swap Merger and an investment in the Newbev common shares and ADSs that you will receive in connection with this transaction.

Risks Relating to the Stock Swap Merger

The implementation of the Stock Swap Merger may face significant challenges and the ultimate advantages expected to be derived from this transaction will continue to be subject to a number of factors that are beyond our control.

The implementation of the Stock Swap Merger may present significant challenges, including unanticipated costs and delays, shareholder or creditor opposition, regulatory interference and excessive diversion of our management’s attention from the day-to-day management of our operating activities. If our senior management is unable to efficiently implement the Stock Swap Merger, our business could suffer. We cannot guarantee that our management will successfully or cost-effectively implement the Stock Swap Merger.

In addition, even if our management is able to successfully and cost-effectively implement the Stock Swap Merger, the ultimate advantages that we expect to derive from the Stock Swap Merger, such as improved share trading liquidity, enhanced corporate governance standards and increased flexibility for management of our capital structure, will continue to depend upon, among other factors, our future performance, market conditions, investor interest in our securities and general economic, political and business conditions both in Brazil and abroad.

The Stock Swap Merger may not result in the benefits that we seek to achieve, including, among other things, a potential increase in our share trading liquidity.

We are undertaking the Stock Swap Merger because this transaction will simplify our share structure, which we believe will provide advantages both for us and our shareholders, such as an expected increase in the liquidity of our shares (including those represented by ADSs). However, the Stock Swap Merger may not accomplish these objectives. For example, we cannot predict whether a liquid market for the new Newbev common shares and ADSs will materialize or be more liquid than the current market for the Ambev shares and ADSs and, if so, whether that increased trading liquidity for Newbev’s securities will be maintained going forward. The Stock Swap Merger may decrease, or have no impact on, your ability to sell the new Newbev common shares or ADSs you will receive in this transaction, if approved, as compared to your ability to sell the Ambev shares and ADSs that you currently hold.

If the Stock Swap Merger is approved, holders of Ambev preferred shares (including in the form of ADSs) will have to give up these securities, which provide certain rights that are not conferred by the Newbev common shares that they will receive in return.

To compensate for not providing certain rights inherent to common shares, such as (1) full voting rights, (2) the right to be included in a statutory change of control tender offer, and (3) the right

 

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to participate in a voting block representing at least 10% of a company’s common stock to elect one member and respective alternate to its fiscal council without the participation of controlling shareholders, preferred shares provide their holders with certain other rights mandated by the Brazilian Corporation Law for this share class that are not conferred by common shares. In the case of the Ambev preferred shares, these special preferred shareholder rights include: (1) enhanced dividend distribution rights, which require that dividends paid to this share class be 10% greater than those payable in respect of the Ambev common shares, (2) priority in capital reimbursement relative to the Ambev common shares upon a liquidation of Ambev, and (3) the right to elect one member and respective alternate to our Fiscal Council by means of a separate class vote of preferred shareholders. Although the Stock Swap Merger, if approved, will allow Ambev’s preferred shareholders to acquire rights under the Brazilian Corporation Law inherent to common shares as a result of their receipt of Newbev common shares bearing those rights, they will lose the special rights conferred to them by the Ambev preferred shares as a result of their surrender of those shares pursuant to the terms of the transaction.

Our controlling shareholders may have actual or potential conflicts of interest relating to the Stock Swap Merger.

Our controlling shareholders may have actual or potential conflicts of interest relating to the Stock Swap Merger. With a view to addressing this aspect of the Stock Swap Merger, the transaction will only be implemented only if a majority of the minority held Ambev common and preferred shares present at the Ambev EGM, as separate classes and without the participation of our controlling shareholders, are each in favor of the transaction. Nevertheless, conflicts of interest may still permeate the proposed transaction because, in connection with corporate restructurings generally (including the Stock Swap Merger), the Brazilian Corporation Law does not: (1) establish any specific minimum or maximum exchange ratio for the transaction, (2) require that the board of directors of the companies involved formally make a determination that the terms of the transaction are “fair,” either procedurally or financially, to noncontrolling shareholders, or (3) require the establishment of any special independent committee or otherwise provide for a review and, if necessary, alteration of the proposed voting or other corporate governance procedures applicable to the transaction.

We will continue to have a distinct controlling shareholder following the Stock Swap Merger.

The equity stake to be held by each Ambev shareholder in Newbev after the Stock Swap Merger will be the same as the total equity stake held by those shareholders in Ambev prior to the consummation of the transaction. However, because the Ambev preferred shares will be converted into Newbev common shares and Newbev’s capital stock will be comprised exclusively of common shares as a result of the Stock Swap Merger, the voting power that all of Ambev’s common shareholders, including our controlling shareholders, have in us before the Stock Swap Merger will be diluted after the transaction. Nevertheless, given the significant 74.0% stake that ABI beneficially owns in the Ambev common shares, ABI will continue to beneficially own a relevant stake of 61.9% both in Newbev’s total and voting capital stock after the Stock Swap Merger and, therefore, be able to continue to control our corporate affairs subject to a shareholders’ agreement that two of its subsidiaries have with FAHZ to govern the control power over Newbev’s corporate affairs, or the Newbev Shareholders’ Agreement. See “—Risks Relating to the Newbev Common Shares and ADSs—Our current controlling shareholders will continue to be able to determine the outcome of our most significant corporate actions.”

 

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The CVM may suspend the Ambev EGM for up to 15 days.

The CVM may suspend the Ambev EGM for up to 15 days in order to analyze the Stock Swap Merger and verify that it does not breach applicable Brazilian laws or regulations. Although we believe that the proposed Stock Swap Merger and its terms do not breach those laws or regulations, we cannot predict the outcome of any such analysis of the Stock Swap Merger by the CVM.

There is uncertainty regarding the U.S. income tax consequences to U.S. holders of the new Newbev common shares and ADSs resulting from the Stock Swap Merger, and as we have not requested (and will not request) any ruling relating to these tax consequences, you could be subject to U.S. federal income tax on the exchange of your Ambev shares or ADSs for Newbev common shares or ADSs pursuant to the Stock Swap Merger if the intended U.S. federal income tax treatment of the proposed Stock Swap Merger were to be successfully challenged by the Internal Revenue Service.

The proposed Stock Swap Merger should qualify as a tax-free exchange of Ambev ADSs or shares of Ambev common or preferred stock for Newbev ADSs or shares of Newbev common stock for U.S. federal income tax purposes, and Newbev intends to treat it as such. If the Stock Swap Merger so qualifies as a tax-free exchange, generally no gain or loss will be recognized by a U.S. holder of Ambev common shares, preferred shares or ADSs upon such holder’s receipt solely of Newbev common shares or ADSs in exchange for Ambev common shares, preferred shares or ADSs for U.S. federal income tax purposes pursuant to the proposed Stock Swap Merger. However, this conclusion is not free from doubt, as discussed in more detail in “Part Five: The Stock Swap Merger—Tax Considerations—Material U.S. Federal Income Tax Considerations—The Proposed Stock Swap Merger—Tax Treatment of the Proposed Stock Swap Merger.” Furthermore, we have not requested (and will not request) any ruling from the Internal Revenue Service, or the IRS, as to the U.S. federal income tax consequences of the Stock Swap Merger. If the Stock Swap Merger does not qualify for tax-free exchange treatment, then the Stock Swap Merger will be taxable to U.S. holders, and certain Non-U.S. holders, of Ambev shares and ADSs on the exchange of their Ambev shares or ADSs for Newbev common shares or ADSs pursuant to the Stock Swap Merger.

For a discussion of certain other U.S. tax matters that may be relevant to U.S. holders and Non-U.S. holders, see “Part Five: The Stock Swap Merger—Tax Considerations—Material U.S. Federal Income Tax Considerations.”

There is no clear guidance under Brazilian law or judicial precedents regarding the income tax consequences resulting from a transaction such as the Stock Swap Merger, and high-level administrative decisions have been issued against Brazilian taxpayers in the context of stock swap mergers.

There is no specific legislation or rule nor judicial precedent regarding the Brazilian income tax consequences resulting from transactions such as the Stock Swap Merger. On the other hand, although the Brazilian Administrative Council of Tax Appeals (Conselho Administrativo de Recursos Fiscais), the highest administrative tax court of Brazil’s federal tax administration, has issued decisions discussing the application of income tax to these transactions, they are very limited in number and none of them have involved ADSs or non-residents of Brazil. These decisions are conflicting. For these reasons, the opinion of our external Brazilian tax counsel regarding the Stock Swap Merger does not go beyond stating that it is more likely than not that Brazilian income tax is not due upon the exchange by non-residents of Brazil of their Ambev shares and ADSs for new Newbev common shares and ADSs in the transaction.

 

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Therefore, although, based on the opinion of our external Brazilian tax counsel, we understand that there are arguments that can be made to the effect that Brazilian income tax is not due upon the above referenced exchange of securities, it is not possible to provide further assurances of the Brazilian tax consequences of this transaction.

Therefore, if our understanding of the Brazilian tax consequences of the Stock Swap Merger were to be successfully challenged by the Brazilian tax administration, Newbev could be held liable for not having withheld the applicable withholding income tax on any alleged taxable capital gains of shareholders, including any applicable late penalties and interest. While shareholders would not be directly liable to the Brazilian tax authorities in such a case, Newbev reserves the right to seek a reimbursement from them for any such subsequently paid withholding income taxes, except for any applicable late penalties and interest, though no assurance can be given that in such a case Newbev would be successful in obtaining the referred reimbursements.

For a further discussion of the Brazilian income tax consequences of the Stock Swap Merger to non-residents of Brazil, see “Part Five: The Stock Swap Merger—Material Brazilian Tax Considerations—Taxes Relating to the Stock Swap Merger—Income Tax.”

Risks Relating to the Newbev Common Shares and ADSs

The relative volatility and illiquidity of securities of Brazilian companies may substantially limit your ability to sell the Newbev common shares and ADSs at the price and time you desire.

Investing in securities of companies in emerging markets, such as Brazil, involves greater risk than investing in securities of companies from more developed countries and those investments are generally considered speculative in nature. Brazilian investments, such as investments in Newbev common shares and ADSs, are subject to economic and political risks, involving, among other factors:

 

   

changes in the Brazilian regulatory, tax, economic and political environment that may affect the ability of investors to receive payment, in whole or in part, in respect of their investments; and

 

   

restrictions on foreign investment and on the repatriation of capital invested.

The Brazilian securities markets are substantially smaller, less liquid and more concentrated and volatile than major U.S. and European securities markets. They are also not as highly regulated or supervised as those other markets. The relative illiquidity and smaller market capitalization of Brazilian securities markets may substantially limit your ability to sell the Newbev common shares and ADSs at the price and time you desire.

Deterioration in economic and market conditions in other emerging market countries as well as in developed economies may adversely affect the market price of the Newbev common shares and ADSs.

Economic and market conditions in other emerging market countries, especially those in Latin America, influence the market for securities issued by Brazilian companies as well as investors’ perception of economic conditions in Brazil. Past economic crises in emerging markets, such as in Southeast Asia, Russia and Argentina, triggered securities market volatility in other emerging market countries, including Brazil. In addition, global financial crises originating in developed economies, including the subprime debt crisis and the failure of Lehman Brothers in the United States and the sovereign debt crisis in Europe, has had an impact on many economies and capital markets around the world, including Brazil, which may adversely affect investors’ interest in the securities of Brazilian issuers such as Newbev. Therefore, the market value of the Newbev common shares and ADSs may be adversely affected by events occurring outside of Brazil.

 

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Our current controlling shareholders will continue to be able to determine the outcome of our most significant corporate actions.

Upon consummation of the Stock Swap Merger, ABI will beneficially own Newbev common shares representing approximately 61.9% of the total voting power in Newbev. Therefore, ABI will have control power over Newbev even though that power will remain subject to the Newbev Shareholders’ Agreement. For further information, see “Part Five: The Stock Swap Merger—Principal Transaction Documents—Newbev Shareholders’ Agreement.”

After the consummation of the Stock Swap Merger, ABI and FAHZ will continue to be able to elect the majority of the members of our Board of Directors and Fiscal Council and determine the outcome of most other actions requiring shareholder approval, including dividend distributions, the consummation of corporate restructurings, issuances of new shares, sales of material assets and bylaw amendments. Under the Brazilian Corporation Law, the protections afforded to noncontrolling security holders may differ from the corresponding protections and fiduciary duties applicable to public companies of the United States or other jurisdictions. See “—As a Brazilian company, Newbev is subject to different corporate laws and regulations than those typically applicable to U.S. listed companies, which may result in Newbev’s shareholders having fewer or less well-defined shareholder rights than the shareholder rights of those companies.”

Newbev’s shareholders may not receive any dividends.

According to Newbev’s bylaws, the company must generally pay its shareholders 40% of its annual adjusted net income as presented in Newbev’s parent company (individual) financial statements prepared under Brazilian GAAP, which differ from net income as presented in parent company (individual) or consolidated financial statements prepared under IFRS. The main sources for these dividends will be cash flows from the operations of Ambev and its operating subsidiaries and the distribution of those cash flows to Newbev in the form of dividends or interest on shareholders’ equity. The net income of Newbev and its Brazilian operating subsidiaries, including Ambev, may be capitalized, used to absorb losses or otherwise appropriated as allowed under Brazilian GAAP and the Brazilian Corporation Law. Therefore, that net income may not be available to be paid out to Newbev’s shareholders in a given year. In addition, Newbev might not pay dividends to its shareholders in any particular fiscal year upon the determination of its Board of Directors that any such distribution would be inadvisable in view of the company’s financial condition. While the law does not establish the circumstances rendering the payment of dividends inadvisable, it is generally agreed that a Brazilian company does not need to pay dividends if such payment threatens its existence as a going concern or harms its normal course of operations. Any dividends not distributed would be allocated to a special reserve account for future payment to shareholders, unless used to offset subsequent losses or as otherwise provided for in Newbev’s bylaws.

Brazilian foreign exchange controls and regulations could restrict conversions and remittances abroad of the dividend payments and other shareholder distributions paid in Brazil in reais in respect of the Newbev common shares (including shares underlying the Newbev ADSs).

Brazilian law provides that whenever there is a serious imbalance in Brazil’s balance of payments or reasons to foresee such a serious imbalance, the Brazilian government may impose temporary restrictions on the remittance to foreign investors of the proceeds of their investments in Brazil. For example, for approximately six months in 1989 and early 1990, the Brazilian government froze all dividend and capital repatriations that were owed to foreign equity investors, which were held

 

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by the Central Bank in order to conserve Brazil’s foreign currency reserves at the time. These amounts were subsequently released in accordance with Brazilian government directives. Similar measures could be taken by the Brazilian government in the future.

As a result, the Brazilian government may in the future restrict the conversion and remittance abroad, to holders of Newbev ADSs or holders of Newbev common shares residing outside Brazil, of dividend payments and other shareholder distributions paid in Brazil in reais in respect of the Newbev common shares (including shares underlying the Newbev ADSs). The likelihood that the Brazilian government would impose such restrictions may be affected by the extent of Brazil’s foreign currency reserves, the availability of foreign currency in the foreign exchange markets on the date a payment is due, the size of Brazil’s debt service burden relative to the economy as a whole and other factors. We cannot assure you that the Central Bank will not modify its policies or that the Brazilian government will not institute restrictions or delays on cross-border remittances in respect of securities issued in the international capital markets. For further information on this matter, see “Part Two: Summary—Exchange Rates.”

If Newbev were a passive foreign investment company, or PFIC, for the 2012 taxable year, or is a PFIC for future taxable years, U.S. holders would generally be subject to potentially adverse U.S. federal income tax rules.

If, during any taxable year of a non-U.S. corporation, 75% or more of the corporation’s gross income consists of certain types of “passive” income, or the average value during a taxable year of the “passive assets” of the corporation (generally assets that generate passive income) is 50% or more of the average value of all the corporation’s assets, the corporation will be treated as a PFIC under U.S. federal income tax law.

Newbev believes that it was not a PFIC during the 2012 taxable year, and does not expect to become a PFIC in subsequent taxable years. Newbev has not obtained a ruling from the IRS, and there is no assurance that the IRS will agree with Newbev’s position. The determination of PFIC status is a factual determination and cannot be made until the close of the applicable tax year and the PFIC rules are complex. If Newbev were a PFIC in 2012, or were to become a PFIC in future years, U.S. holders would generally be subject to potentially adverse U.S. federal income tax rules. See “Part Five: The Stock Swap Merger—Tax Considerations—Material U.S. Federal Income Tax Considerations—Passive Foreign Investment Company, or PFIC, Rules” for more information with respect to the PFIC rules.

U.S. holders are urged to consult their own tax advisors regarding the potential application of the PFIC rules to the Newbev common shares or ADSs.

If you exchange your Newbev ADSs for the respective Newbev common shares underlying those ADSs, you risk losing some Brazilian tax and foreign currency remittance advantages.

The Newbev ADSs benefit from the foreign capital registration that The Bank of New York Mellon (as depositary of Newbev’s ADS program, or the Depositary) has in Brazil, which permits it to convert dividends and other shareholder distributions that will be made in respect of the Newbev common shares underlying the Newbev ADSs into foreign currency and remit the proceeds of such conversion abroad. If you exchange your Newbev ADSs for the respective Newbev common shares underlying those ADSs, you will be entitled to rely on the Depositary’s foreign capital registration for only five business days from the date of such exchange. After this five-day period, you will not be able

 

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to remit abroad non-Brazilian currency unless you obtain your own foreign capital registration. In addition, gains with respect to the Newbev common shares will be subject to a less favorable tax treatment unless you obtain your own certificate of foreign capital registration or register your investment in the Newbev common shares with the Central Bank pursuant to CMN Resolution No. 2,689/00, or Resolution 2,689. For a more complete description of Brazilian restrictions on foreign investments and Brazilian foreign investment regulations, see “Part Two: Summary—Exchange Rates” and “Part Six: Shareholder Rights—Exchange Controls.” For a more complete description of Brazilian tax regulations, see “Part Five: The Stock Swap Merger—Tax Considerations—Material Brazilian Tax Considerations—Taxes Relating to the Ongoing Ownership and Subsequent Disposition of Newbev Common Shares and ADSs—Income Tax on Gains Arising from the Subsequent Disposition of Newbev Common Shares and ADSs.”

As a Brazilian company, Newbev is subject to different corporate laws and regulations than those typically applicable to U.S. listed companies, which may result in Newbev’s shareholders having fewer or less well-defined shareholder rights than the shareholder rights of those companies.

Newbev’s corporate affairs are governed by its bylaws and the Brazilian Corporation Law, which may differ from the legal principles that would apply to Newbev if the company were incorporated in a jurisdiction in the United States, such as Delaware or New York, or in other jurisdictions outside of Brazil. In addition, shareholder rights under the Brazilian Corporation Law to protect them from actions taken by the board of directors or controlling shareholders may be fewer and less well-defined than under the laws of jurisdictions outside of Brazil.

Although insider trading and price manipulation are restricted under applicable Brazilian capital markets regulations and treated as crimes under Brazilian law, the Brazilian securities markets may not be as highly regulated and supervised as the securities markets of the United States or other jurisdictions outside Brazil. In addition, rules and policies against self-dealing and for the preservation of shareholder interests may be less well-defined and enforced in Brazil than in the United States or other jurisdictions outside Brazil, potentially causing disadvantages to a holder of Newbev ADSs as compared to a holder of shares in a U.S. public company. Further, corporate disclosures may be less complete or informative than required of public companies in the United States or other jurisdictions outside Brazil.

Certain shareholder entitlements may not be available to U.S. holders of Newbev ADSs.

Due to certain United States laws and regulations, U.S. holders of Newbev ADSs may not be entitled to all of the rights possessed by holders of Newbev common shares. For instance, U.S. holders of Newbev ADSs may not be able to exercise preemptive, subscription or other rights in respect of the Newbev common shares underlying their Newbev ADSs, unless a registration statement under the Securities Act is effective with respect to those rights or an exemption from the registration requirements of the Securities Act is available.

Holders of Newbev ADSs may be unable to fully exercise voting rights with respect to the Newbev common shares underlying their ADSs.

Under Brazilian law, only shareholders registered as such in the corporate books of Brazilian companies may attend shareholders’ meetings. Because all the Newbev common shares underlying the Newbev ADSs are registered in the name of the Depositary, the Depositary (and not ADS holders) is entitled to attend shareholders’ meetings of Newbev. A holder of Newbev ADSs is entitled to instruct

 

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the Depositary as to how to vote the respective Newbev common shares underlying their ADSs only pursuant to the procedures set forth in the deposit agreement for Newbev’s ADS program. Accordingly, holders of Newbev ADSs will not be allowed to vote the corresponding Newbev common shares underlying their ADSs directly at a shareholders’ meeting of Newbev (or to appoint a proxy other than the Depositary to do so), unless they surrender their Newbev ADSs for cancellation in exchange for the respective Newbev common shares underlying their ADSs. We cannot ensure that such ADS cancellation and exchange process will be completed in time to allow Newbev ADS holders to attend a shareholders’ meeting of Newbev.

Further, the Depositary has no obligation to notify Newbev ADS holders of an upcoming vote or to distribute voting cards and related materials to those holders, unless Newbev specifically instructs the Depositary to do so. If Newbev provides such instruction to the Depositary, it will then notify Newbev’s ADS holders of the upcoming vote and arrange for the delivery of voting cards to those holders. We cannot ensure that Newbev’s ADS holders will receive proxy cards in time to allow them to instruct the Depositary as to how to vote the Newbev common shares underlying their Newbev ADSs. In addition, the Depositary and its agents are not responsible for a failure to carry out voting instructions or for an untimely solicitation of those instructions.

As a result, holders of Newbev ADSs may be unable to fully exercise their voting rights.

Future equity issuances may dilute the holdings of holders of Newbev common shares and ADSs and could materially affect the market price for those securities.

Newbev may in the future decide to offer additional equity to raise capital or for other purposes. Any such future equity offerings could reduce the proportionate ownership and voting interests of holders of Newbev common shares and ADSs, as well as the earnings and net equity value per Newbev common share or ADS. Any offering of shares and ADSs by Newbev or its main shareholders, or a perception that any such offering is imminent, could have an adverse effect on the market price of these securities.

Newbev’s status as a foreign private issuer allows it to follow local corporate governance practices and exempts it from a number of rules under the U.S. securities laws and listing standards, which may limit the amount of public disclosures available to investors and the shareholder protections afforded to them.

Newbev is a foreign private issuer, as defined by the SEC for purposes of the Exchange Act. As a result, it is exempt from rules under the Exchange Act that impose certain disclosure obligations and procedural requirements for proxy solicitations under Section 14 of the Exchange Act. For example, Newbev’s officers, directors and principal shareholders are exempt from the reporting and “short-swing” profit recovery provisions under Section 16 of the Exchange Act. Moreover, Newbev is not required to file periodic reports and financial statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act. Accordingly, there may be less publicly available information concerning Newbev than there is for U.S. public companies.

In addition, for so long as Newbev remains as a foreign private issuer, it will be exempt from most of the corporate governance requirements of stock exchanges located in the United States. Accordingly, you will not be provided with some of the benefits or have the same protections afforded to shareholders of U.S. public companies. The corporate governance standards applicable to Newbev

 

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are considerably different than the standards applied to U.S. domestic issuers. For example, although Rule 10A-3 under the Exchange Act generally requires that a company listed in the United States have an audit committee of its board of directors composed solely of independent directors, as a foreign private issuer Newbev is relying on an exemption from this requirement under Rule 10A-3(c)(3) of the Sarbanes-Oxley Act of 2002 that is available to it as a result of features of the Brazilian Corporation Law applicable to its Fiscal Council. In addition, Newbev is not required under the Brazilian Corporation Law to, among other things:

 

   

have a majority of its Board of Directors be independent;

 

   

have a compensation committee, a nominating committee, or corporate governance committee of its Board of Directors (though Newbev will have a non-permanent Operations, Finance and Compensation Committee that will be responsible for evaluating its compensation policies applicable to management);

 

   

have regularly scheduled executive sessions with only non-management directors (though none of Newbev’s current directors hold management positions nor is it expected that management positions will be held by any of the directors that are intended to be appointed to the new Board of Directors of Newbev following the consummation of the Stock Swap Merger); or

 

   

have at least one executive session of solely independent directors each year.

Foreign holders of Newbev ADSs may face difficulties in serving process on or enforcing judgments against it and other persons.

Newbev is organized under the laws of Brazil and most of its directors and executive officers, as well as its independent registered public accounting firm, reside or are based in Brazil. In addition, substantially all of Newbev’s assets and those of these other persons are located in Brazil. As a result, it may not be possible for foreign holders of Newbev ADSs to expediently effect service of process upon Newbev or these other persons within the United States or other jurisdictions outside Brazil or to effectively enforce against Newbev or these other persons judgments obtained in the United States or other jurisdictions outside Brazil. Because judgments of U.S. courts for civil liabilities based upon the U.S. federal securities laws may only be enforced in Brazil if certain conditions are met, holders of Newbev ADSs may face greater difficulties in pursuing their interests in legal actions against Newbev and its directors and executive officers than would shareholders of a U.S. corporation. In addition, Brazil does not have a treaty with the United States to facilitate or expedite the enforcement in Brazil of decisions issued by a court in the United States.

For a discussion of the conditions that need to be met for foreign awards to be enforced in Brazil, see “Part Seven: Additional Information for Shareholders—Enforceability of Civil Liabilities Under U.S. Securities Laws.”

Judgments of Brazilian courts with respect to the Newbev common shares will be payable only in reais.

If proceedings are brought in the courts of Brazil seeking to enforce Newbev’s obligations in respect of the Newbev common shares, Newbev will not be required to discharge any such obligations in a currency other than reais. Under Brazilian exchange control limitations, an obligation in Brazil to pay amounts denominated in a currency other than reais may only be satisfied in Brazilian currency at the exchange rate, as determined by the Central Bank, in effect on the date the judgment is obtained, and any such amounts are then adjusted to reflect exchange rate variations through the effective payment date. The then prevailing exchange rate may not afford non-Brazilian investors with full compensation for any claim arising out of, or related to, Newbev’s obligations under the Newbev common shares.

 

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Risks Relating to Our Operations, Risks Relating to Brazil and Other Countries Where We Operate and Risks Relating to the Ambev Shares and ADSs

Because Newbev has no operating activities, the Stock Swap Merger will produce no change to the business operations of Ambev or the places where it conducts those operations. As a result, for a discussion of the risk factors relating to (1) Ambev and the countries where it operates (and accordingly relating to Newbev and the countries where it will operate after the Stock Swap Merger) and (2) the Ambev shares and ADSs, see the 2012 Ambev 20-F included as Annex A to this prospectus.

 

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PART FOUR: INFORMATION ON THE COMPANIES

Information on Newbev

Overview

Newbev is a closely held, non-reporting Brazilian corporation (sociedade anônima fechada) indirectly controlled by ABI that holds Ambev shares.

Newbev was incorporated on July 8, 2005 as a non-reporting corporation under the Brazilian Corporation Law with the name Gimba Suprimentos de Escritório S.A. On October 26, 2005, Newbev was acquired by IIBV and converted into a Brazilian limited liability company (sociedade limitada). At that time, Newbev had its name changed to InBev Participações Societárias Ltda. and its corporate purpose amended to allow it, among other things, to invest directly and indirectly in other companies. On April 22, 2009, Newbev was converted into a corporation under the Brazilian Corporation Law with the name of InBev Participações Societárias S.A., having kept the same corporate purpose of when it was a limited liability company.

Newbev does not have any operating revenues. In addition, relative to Ambev’s much greater assets and liabilities, Newbev does not have any material assets or liabilities. The most relevant asset in Newbev’s balance sheet as of December 31, 2012 was a 0.5% ownership interest in Ambev’s capital stock, equal to 1.1% of the Ambev preferred shares, with a book value of R$1,274.7 million as of that date.

As a result of the Contribution, which occurred on June 17, 2013, Newbev became the direct holder of 74.0% and 46.3% of the Ambev common shares and preferred shares, respectively, and accordingly Ambev’s direct controlling shareholder.

Newbev’s legal and corporate headquarters is located at Rua Dr. Renato Paes de Barros, 1017, 3rd floor, 04530-001, São Paulo, SP, Brazil, and its telephone number is +55 (11) 2122-1200.

Recent Developments

At a combined annual and extraordinary general shareholders’ meeting of Newbev held on March 1, 2013, the following resolutions were approved, among others:

 

   

the change of its legal name from InBev Participações Societárias S.A. to Ambev S.A.;

 

   

the distribution of dividend and interest on shareholders’ equity in the amount of R$11.0 million and R$11.1 million (after applicable withholding taxes), respectively, payable starting on April 11, 2013;

 

   

the amendment and restatement of Newbev’s bylaws to incorporate substantially the same provisions as those present in Ambev’s bylaws; and

 

   

the appointment of Newbev’s current three directors.

In addition, a meeting of Newbev’s current Board of Directors was held on that same date to elect its current two executive officers and deliberate on the other matters, including the adoption of a disclosure and securities trading manual.

 

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On June 17, 2013, and hence prior to the effectiveness of the registration statement of which this prospectus forms a part, an extraordinary general shareholders’ meeting of Newbev was held in which a capital increase of Newbev was approved that was entirely subscribed and paid for by IIBV and AmBrew with all of the Ambev shares previously held by them. See “Part Five: The Stock Swap Merger—Past Contracts, Transactions, Negotiations and Agreements—The Contribution.”

Management’s Discussion and Analysis of Financial Condition and Results of Operation

Because Newbev’s historical financial position and results of operation are negligible relative to Ambev’s more significant historical financial position and results of operation, the historical financial statements of Newbev immediately following the consummation of the Stock Swap Merger will reflect a financial position and results of operation for Newbev that is similar, in all material respects, to Ambev’s financial position and results of operation, as shown in Ambev’s historical financial statements prior to the consummation of the transaction. For the same reason, the critical accounting policies of Ambev will be adopted by Newbev in all its material respects. As a result, a management’s discussion and analysis of Newbev’s financial condition and results of operation, as shown in its audited historical financial statements included elsewhere in this prospectus, would not add any substantive information for the investment decision that Ambev’s shareholders will make in connection with the Stock Swap Merger, because any such discussion and analysis would be substantially identical to the management’s discussion and analysis of Ambev’s financial condition and results of operation for the same periods.

In addition, the operating results in the Newbev Predecessor combined financial statements are mainly driven by the operating results of Ambev, except for the effect of purchase accounting adjustments that have been pushed down to reflect the predecessor cost basis, which are described in Note 1 to the audited Newbev Predecessor combined financial statements, included elsewhere in this prospectus, and which had an immaterial effect on the results of operations.

For more information on Newbev, see “Part Nine: Financial Statements and Related Financial Information.”

Information on Ambev

History

Companhia de Bebidas das Américas - Ambev is the successor to Companhia Cervejaria Brahma, or Brahma, and Companhia Antarctica Paulista Indústria Brasileira de Bebidas e Conexos, or Antarctica, two of the oldest brewers in Brazil. Antarctica was founded in 1885. Brahma was founded in 1888 as Villiger & Cia. The Brahma brand was registered on September 6, 1888, and in 1904 Villiger & Cia. changed its name to Companhia Cervejaria Brahma. Ambev was incorporated as Aditus Participações S.A. on September 14, 1998 as a non-reporting Brazilian corporation. The formation of Ambev consisted of the combination of Brahma and Antarctica and was carried out over the course of 1999 and 2000. The combination first resulted in Ambev becoming the owner of 55.1% of Brahma’s voting shares and 88.1% of Antarctica’s voting shares, while the Braco Group and FAHZ each owned 76% and 24% of Ambev’s voting shares, respectively. Subsequently, the minority shareholders of Antarctica (in September 1999) and Brahma (in September 2000) exchanged their shares in Antarctica and Brahma for new Ambev shares, causing both those companies to become wholly-owned subsidiaries of Ambev. Today Ambev is a reporting corporation under the laws of Brazil with its common and preferred shares listed on the BM&FBOVESPA and its common and preferred ADSs listed on the NYSE.

 

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In 1994, Brahma started its international expansion into Latin America with beer operations in Argentina, Paraguay and Venezuela.

In 1997, Brahma acquired the exclusive rights to produce, sell and distribute Pepsi CSD products in northeastern Brazil, and in 1999 obtained the exclusive rights to produce, sell and distribute Pepsi CSD products throughout Brazil. In October 2000, Ambev entered into a new franchise agreement with PepsiCo which terminated the Brahma franchise agreement and granted it exclusive bottler and distributor rights for Pepsi CSD products in Brazil. In January 2002, Ambev expanded its partnership with PepsiCo to include the production, sale and distribution of Gatorade. Ambev’s PepsiCo franchise agreement for Brazil expires in 2017 and, thereafter, will be automatically renewed for additional ten-year terms absent two years’ prior notice by either party of its intent not to renew the contract following the expiration of the initial or any subsequent term. In addition, certain of Ambev’s subsidiaries have franchise agreements for Pepsi products in Argentina, Bolivia, Uruguay, Peru and the Dominican Republic.

In January 2003, Ambev completed a two-step business combination with Quilmes Industrial Société Anonyme, or Quinsa, through which Ambev acquired an initial 40.5% economic interest and joint control of Quinsa along with Beverages Associates (BAC) Corp., or BAC, the former controlling shareholder of Quinsa, establishing a leading presence in the beer markets of Argentina, Bolivia, Paraguay and Uruguay, while agreeing on the terms for Ambev to acquire full control of Quinsa from BAC in the future. In April 2006, Ambev acquired BAC’s shares in Quinsa, increasing its equity interest to approximately 91% of its total share capital and started to fully consolidate Quinsa upon the closing of the transaction in August 2006.

During 2003 and the first quarter of 2004, Ambev expanded its presence in the north of Latin America through a series of acquisitions by which it established a foothold in several beverage markets, such as Central America, Peru, Ecuador and the Dominican Republic.

In August 2004, Ambev and a Belgian brewer called Interbrew N.V./S.A. (as ABI was then named) completed a business combination that involved the merger of an indirect holding company of Labatt Brewing Company Limited, one of the leading brewers in Canada, into Ambev. At the same time, the then controlling shareholders of Ambev completed the contribution of all shares of an indirect holding company which owned a controlling stake in Ambev to Interbrew N.V./S.A. in exchange for newly issued shares of Interbrew N.V./S.A. After this transaction, Interbrew N.V./S.A. changed its company name to InBev S.A./N.V. (and, since 2008, to Anheuser-Busch InBev N.V./S.A.) and became the majority shareholder of Ambev through subsidiaries and holding companies.

Overview

We are the largest brewer in Latin America in terms of sales volumes and one of the largest beer producers in the world, according to our estimates. We produce, distribute and sell beer, CSD and NANC products in 16 countries across the Americas. We are one of the largest PepsiCo independent bottlers in the world.

We conduct our operations through three principal business segments:

 

   

Latin America North, which includes our operations in Brazil, where we operate two divisions (the beer sales division and the CSD & NANC sales division), and our HILA-Ex operations, which includes our operations in the Dominican Republic, Saint Vincent,

 

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Antigua, Dominica, Guatemala (which also serves El Salvador and Nicaragua) and Peru and Ecuador (both of which became part of our Latin America South business segment starting in 2013);

 

   

Latin America South, which includes our operations in Argentina, Bolivia, Paraguay, Uruguay, Chile and, starting in 2013, Peru and Ecuador; and

 

   

Canada, represented by Labatt’s operations, which includes domestic sales in Canada and some exports to the U.S. market.

The following map illustrates our three business segments as of March 31, 2013.

LOGO

Business Strategy

We aim to continuously create value for our shareholders. The main components of our strategy to achieve this goal include:

 

   

our people and culture;

 

   

top line growth;

 

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building strong brands;

 

   

excellence in route to market;

 

   

permanent cost efficiency; and

 

   

financial discipline.

Our People and Culture

We believe highly qualified, motivated and committed employees are critical to our long-term success. We carefully manage our hiring and training process with a view to recruiting and retaining outstanding professionals. In addition, we believe that through our compensation program, which is based both on variable pay and stock ownership, we have created financial incentives for high performance and results. Another core element of our culture is our distinguished managerial capability, which is characterized by (1) a hardworking ethos, (2) results-focused evaluations, (3) the encouragement of our executives to act as owners and not only as managers, (4) leadership by personal example, and (5) appreciation of field experience.

Top Line Growth

We are constantly seeking sustainable growth of our net revenues. For instance, in Brazil we have focused our efforts behind four main commercial strategies:

 

   

innovation: we seek to expand the beer category and maintain a healthy pipeline of products through innovation in liquids, packaging and route to market to continue connecting with consumers in different consumption occasions;

 

   

premium: we believe the weight of premium brands volume can grow in the Brazilian beer industry and we are working towards leading this growth through our portfolio of domestic and international premium brands;

 

   

regional expansion: we have been investing to expand our presence in the North and Northeast regions of Brazil mainly due to the per capita consumption and market share growth opportunities. We focus on expanding our production capacity and executing our strong brands and route to market capabilities in those faster growing regions of Brazil; and

 

   

returnable glass bottles: our commercial initiatives are focused on strengthening the on-premise channel (e.g., Nosso Bar franchise, micro events) and reintroducing returnable bottles into the off-premise channel (e.g., Pit Stop formats in supermarkets, 300 ml returnable glass bottle).

Building Strong Brands

We believe that building strong brands that connect and create enduring bonds with our consumers is a fundamental prerequisite to assure the sustainability of our business in the future. Our consumers are the reason for everything we do and we need to understand them, be close to them and connect them to our brands in order to build enduring ties with them. We bring together tradition and modernity in our product portfolio in a clear strategy to create value and insert our brands into the lives of our consumers.

 

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Excellence in Route to Market

Delivering our brands to almost one million points of sale in Brazil is a very complex feature of our business. For several years, one of our main areas of focus has been to increase direct distribution in major cities while still strengthening our third-party distribution system. In Brazil, for instance, instead of operating three legacy, parallel, single-brand systems (each dedicated to one of our major brands: Skol, Brahma and Antarctica), we have been shifting towards a multi-brand network of distributors committed to handling all of our brands. In addition, we are constantly seeking to improve our point of sale execution through new and creative measures. One of our key marketing initiatives was the introduction into the Brazilian market of our custom-made beverage refrigerators designed and built to chill beer and soft drinks to the optimal temperature for on-premise consumption. These refrigerators also work as effective marketing tools, as they are decorated with images related to our core brands.

Permanent Cost Efficiency

Cost control is one of the top priorities of our employees. Each of our departments must comply with its respective annual budget for fixed and variable costs. As a means of avoiding unnecessary expenses, we have designed a management control system inspired on “zero-base budgeting” concepts that requires every manager to build from scratch an annual budget for his/her respective department.

Financial Discipline

Our focus is not only on volumes and operating performance, but also on the disciplined management of our working capital and cash flow generation. Our objective is to maximize the return to our shareholders through a combination of payments of dividends and interest on shareholders’ equity, while at the same time keeping our investment plans and holding an adequate level of liquidity to accommodate the seasonality of our business and cope with often volatile and uncertain financial market conditions.

Ambev’s legal and corporate headquarters is located at Rua Dr. Renato Paes de Barros, 1017, 4th floor, 04530-001, São Paulo, SP, Brazil, and its telephone number is +55 (11) 2122-1200.

Recent Developments

At the combined annual and extraordinary general shareholders’ meeting of Ambev held on April 29, 2013, the shareholders ratified a series of capital increases in the total amount of R$1,007,865,312.44 upon the private issuance of 6,850,907 new Ambev common shares and 7,448,064 new Ambev preferred shares that had been approved by the Board from July 2012 through March 2013 within the limit of Ambev’s authorized capital.

At a meeting of the Board of Directors of Ambev held on May 10, 2013, the Board approved a capital increase of Ambev, within the limit of its authorized capital, in the amount of R$11,484,176.59 upon the private issuance of 510,799 new Ambev preferred shares. The referred capital increase resulted from the exercise of stock options awarded under Ambev’s stock option plan.

Management’s Discussion and Analysis of Financial Condition and Results of Operation

The following management’s discussion and analysis of financial condition and results of operations should be read in conjunction with Ambev’s unaudited consolidated interim financial

 

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statements included elsewhere in this prospectus and its year-end audited consolidated financial statements and the 2012 Ambev 20-F, included as Annex A to this prospectus. This prospectus contains forward-looking statements that involve risks and uncertainties. Ambev’s actual results may differ materially from those discussed in the forward-looking statements as a result of various factors including, without limitation, those set forth in “Cautionary Statement Regarding Forward-Looking Information” and the matters set forth in this prospectus generally.

The financial information and related discussion and analysis contained in this item are in accordance with IFRS as issued by the IASB. The amounts are in million reais, unless otherwise stated.

Critical Accounting Policies

The SEC has defined a critical accounting policy as a policy for which there is a choice among alternatives available, and for which choosing a legitimate alternative would yield materially different results. Ambev believes that the following are Ambev’s critical accounting policies. Ambev considers an accounting policy to be critical if it is important to its financial condition and results of operations and requires significant or complex judgments and estimates on the part of Ambev’s management.

The preparation of financial statements in conformity with IFRS requires Ambev to use estimates and adopt assumptions that affect the reported amounts of assets and liabilities, revenues and expenses and accounting disclosures. Actual results may differ from those estimated under different variables, assumptions or conditions. Note 3 to Ambev’s unaudited consolidated interim financial statements includes a summary of the significant accounting policies applied in the preparation of these financial statements. In order to provide an understanding about how management forms its judgments about future events, including the variables and assumptions underlying the estimates, and the sensitivity of those judgments to different variables and conditions, Ambev has included below a brief discussion of its more significant accounting policies.

Accounting for Business Combinations and Impairment of Goodwill and Intangible Assets

Ambev has made acquisitions that generated a significant amount of goodwill and other intangible assets, including from the acquisition of Labatt, Quinsa and Cerveceria Nacional Dominicana, or CND.

Under IFRS, goodwill is calculated as the difference between the transferred consideration and the fair value of the net assets acquired. IFRS 3 “Business Combinations” does not permit that goodwill and intangible assets with indefinite useful lives be amortized but they should be tested annually for impairment. Ambev’s intangible assets with definite useful lives are amortized over the estimated useful lives of these assets.

Ambev exercises significant judgment in the process of identifying tangible and intangible assets and liabilities, valuing such assets and liabilities and in determining their remaining useful lives. Ambev generally engages third-party valuation firms to assist in valuing the acquired assets and liabilities. The valuation of these assets and liabilities is based on the assumptions and criteria which include in some cases estimates of future cash flows discounted at the appropriate rates. The use of different assumptions used for valuation purposes including estimates of future cash flows or discount rates may result in different estimates of value of assets acquired and liabilities assumed.

 

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Ambev tests its goodwill and other long-lived assets for impairment annually and whenever events and circumstances indicate that the undiscounted cash flows estimated to be generated by those assets are less than the carrying amount of those items. Ambev’s cash flow estimates are based on historical results adjusted to reflect its best estimate of future market and operating conditions. Ambev’s estimates of fair values used to determine the resulting impairment loss, if any, represent its best estimate based on forecasted cash flows, industry trends and reference to market rates and transactions. Impairments can also occur when Ambev decides to dispose of assets.

Pension and other Post-Retirement Benefits