Anheuser gets $46.3 billion takeover bid from InBev

NEW YORK: InBev NV has offered to buyAnheuser-Busch Cos Inc for $46.3 billion, as it seeks to create the world'slargest brewer with the biggest ever takeover of an alcoholic drinks company.InBev, whose brands include Stella Artois and Beck's, said on Wednesday it isoffering $65 per share for Anheuser, which dominates the U.S. beer market with a48.5 percent share. The offer represents a 24 percent premium to Anheuser'sshare price on May 22 -- the day before reports of merger talks surfaced anddrove Anheuser's shares higher.

The maker of Budweiser and Michelob,which counts Warren Buffett's Berkshire Hathaway Inc as its second-largestshareholder with a 5 percent stake, saw its shares jump more than 7 percent to$62.73 after-hours on Wednesday, after closing at $58.35 on the New York StockExchange. St. Louis-based Anheuser said its board of directors "will evaluatethe proposal carefully and in the context of all relevant factors, includingAnheuser-Busch's long-term strategic plan," and make a determination regardingthe proposal "in due course." The two brewers already have a deal wherebyAnheuser distributes InBev beers in the United States.

Industryexperts see InBev's offer as the opening step in what is likely to become aseries of negotiations that could drive the final deal price close to or above$70 per share. For most of the last century and a half, Anheuser-Busch has beenled by members of the Busch family, who for the most part are believed to beagainst a takeover.

Though the family's ownership of the company hasdwindled to the point where it could not veto a takeover, its influence over the14-member board of directors is said to be strong. Anheuser cannot rely on astaggered board of directors, a poison pill, or a blockage by anti-trustauthorities, said Tom Pirko, president of beverage industry advising firmBevmark.

As a result, he expects Anheuser to be forced to negotiateas high a price as it can. "We're of the mind that that price is somewherebetween $68 and $70," Pirko said. "I think the cut-off price is $75. I don'tthink InBev would go beyond that. I think they'd go for SABMiller first."UK-listed SABMiller Plc has been pegged as a second choicetakeover target for InBev, in the event a deal with Anheuser does not work out.The Financial Times reported on its Alphaville blog that the maker of MillerLite and Pilsner Urquell would consider an approach from InBev. An SAB spokesmanwas not immediately available.

A fund manager at a Boston-basedfirm with a large Anheuser shareholding said he was pleased about the all-cashbid but declined to be identified due to trading restrictions. "It's not clearto me what happens next or how big the fight will be going forward," he said."It's a family ownership but not nearly the type of family ownership that DowJones had. I think we will see that same kind of drama play out here." He addedthat there was "some probability of a competing bid because it's not an insanemultiple that's being paid."

Wachovia analyst Jonathan Feeney saidInBev's proposal was equal to 13 times annual earnings before interest, tax,depreciation and amortization for the domestic and international beer business.In addition to core brands like Budweiser and Bud Light, Anheuser owns 50percent of Mexican brewer Modelo and 27 percent of China's Tsingtao Brewery CoLtd . The company also operates nine theme parks and other properties, and ownscompanies that supply the breweries with bottles and other packaging materials.

In a letter to Anheuser Chief Executive August Busch IV, InBev CEOCarlos Brito sought to quell concerns about the loss of an iconic Americanbrand, the departure of its headquarters from St. Louis, and U.S. breweryclosings. It also made overtures to Modelo, stressing that a combinedInBev-Anheuser would have great opportunities for marketing the Mexicancompany's beers, such as Corona, around the world. There had been speculationthat Anheuser might seek to buy the rest of Modelo as a way of fending off anInBev takeover bid.

But in an interview last week, Modelo CEO CarlosFernandez said that based on what he knew at that time, he thought the companywould retain its independence over the next year. Wachovia's Feeney estimatedthat InBev, known for aggressive cost-cutting, could find about $1.2 billion ayear in savings. "InBev would focus its efforts on streamlining the U.S. beergiant, a possibility which might not sit well with Anheuser distributors,"Feeney said in a research note. "On top of the distributor piece, the highlyregulated nature of the beer industry could pose other deal difficulties."

"Although with a bid in hand we'd rather sit this one out altogetherthan force our view, which is that the stock has fundamental value in themid-$50's and a deal still seems uncertain." As of March 31, Anheuser had about714 million shares outstanding. In the past 52 weeks, the shares have traded ina range of $45.55, which it hit in March, to $58.56.

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