To: The Board of Directors, c/o CFO Alejandro Sadurni
From: XXXXX, XXXXX, XXXXX
We are substantial holders of SAB and are quite distressed by the news about the Company's planned acquisition of FASA.
The potential risks are enormous and do not seem to be justified by even the best possible outcome.
SAB will have exposure to 5 different currencies in addition to greater political risk in 4 different Latin American states.
The magnitude of debt appears quite daunting and the price is very rich.
The market reaction is clearly negative. The current price of the Adr around $10 usd is what the late Mr. Saba paid for his 85% stake many years ago.
We would be supportive of a deal to acquire only the Mexican pharmacies of FASA. We don't see compelling opportunity in a business strategy of growth outside of Mexico however. Consequently, we would also recommend selling all of the pharmacies outside of Mexico to pare debt and improve efficiency.
Could SAB avoid paying the $50 million penalty if the 2 banks decided to withdraw funding support? We suggest that SAB dismiss its financial adviser for agreeing to such a provision.
We add in conclusion that we opposed paying dividends for the past two years following the acquisition in Brazil. In any event, we hope that the Company will eliminate its dividend to better prepare for future growth within Mexico. In hindsight, it is clear that SAB should never have paid any dividends. Paying dividends is wrong-thinking by bad financial-advisers and Wall Street institutions.