InBev bids $46 billion for Anheuser-Busch

By Charley Blaine

A takeover fight for Anheuser-Busch (BUD, news, msgs) erupted this afternoon when InBev, the Belgian owner of brands in Europe and Latin America, offered $46 billion for the company.

InBev bid $65 for each share of Anheuser-Busch, the St. Louis company said in a statement today.

Anheuser-Busch markets Budweiser, the top-selling U.S. beer. Few brands, with the probable exceptions of Coca-Cola (KO, news, msgs), Walt Disney (DIS, news, msgs), McDonald's (MCD, news, msgs) and Microsoft (MSFT, news, msgs) are as ubiquitous in the United States. (Microsoft is the publisher of MSN Money.)

InBev owns the Beck's, Stella Artois and Leffe brands.

If Anheuser-Busch accepts the all-cash bid -- and the bid survives antitrust scrutiny -- the resulting company would control half of the U.S. beer market. It would also overtake SABMiller (SBMRF, news, msgs) as the world's biggest brewer by volume. SABMiller markets the Miller brand in the United States.

• Talk back: Should Anheuser-Busch be sold to foreign owners?

A deal between the two companies is unlikely to have a big impact on the U.S. beer market because Anheuser and InBev already have a distribution partnership in the U.S., Guilio Lombardi, an analyst with Fitch Ratings in Europe, told CNNMoney in May.

Anheuser-Busch climbed as much as 9.7% in after-hours trading after saying its board will evaluate the proposal. The stock was up 7.3% to $62.59 at 6:50 p.m. ET. The stock had risen 2.1% to $58.35 in regular New York Stock Exchange trading.

It's not clear that Anheuser-Busch is thrilled with the offer.

The company said its board will review the merits of the "proposal consistent with its fiduciary duties and in consultation with its financial and legal advisers." The board will pursue the course of action that is in the best interests of Anheuser-Busch's stockholders.

But Morningstar analyst Ann Gilpin predicted that InBev will get what it wants.

If the Anheuser-Busch board balks and rejects the bid -- or demands a higher price, she told the St. Louis Post-Dispatch, "I think InBev would just go straight to the shareholders, and I think the shareholders would vote for it."

But getting the deal done may take time. "I think they would probably resist as much as they can," Fitch'sLombardi said. "They are not desperate to get a deal. They have resisted competition and fought back."

Anheuser-Busch has struggled in recent years as small boutique breweries able to command a premium price began to proliferate. One small brewery, Boston Beer (SAM, news, msgs), the maker of Sam Adams beer, was up 1.5% to $40.31 in after-hours trading this afternoon.

Anheuser-Busch's stock has ranged in price between $40 and $55 since July 2000. It had slipped from $54.67 in early January to $45.55 on March 18 before takeover speculation pushed the shares 30% higher.

InBev's ability to mount a bid was probably strengthened by the decline of the dollar against the euro.

InBev said it envisions keeping St. Louis the headquarters for InBev's North American region, keeping all of Anheuser-Busch's 12 breweries running, and renaming the combined company "to evoke Anheuser-Busch's heritage," the Post-Dispatch reported.
The deal is expected to be financed with at least $40 billion in debt., the paper added. It would make the combined brewer one of the world's five largest consumer products companies. It would have revenue of about $36.4 billion.

Speculation that InBev would bid for the maker of the iconic Budweiser brand has been swirling around financial circles since early February.

The companies control 300 brands

InBev and Anheuser are the world's second- and third-largest brewers as measured by volume. Together they would control 300 brands on six continents, brewing 10 billion gallons of beer each year. Wednesday's offer comes just four years after Belgium's Interbrew merged with Brazil's Ambev, creating InBev.

In a 20-year acquisition spree, InBev has grown from a collection of family-owned Flemish brands to become the top beer maker by sales, dominating the Latin American market.

The offer is 24% more than Anheuser-Busch's share price May 22, the day before reports said InBev was preparing a takeover bid.

"The U.S. accounts for almost a third of world beer profit, and there is hardly any overlap" between the companies, Marcel Hooijmaijers, an analyst at Landsbanki Kepler in Amsterdam, told Bloomberg News before the bid was announced.

Worry in St. Louis

Reports that the company might be purchased by brewer InBev of Belgium have residents worried they might lose a company as closely identified with St. Louis as the iconic Gateway Arch.

Anheuser-Busch employs about 6,000 people in the St. Louis area.

Jeff Rainford, chief of staff for St. Louis Mayor Francis Slay, said, "the brewery has a gigantic impact on St. Louis and on the country. Everybody needs to understand what's at stake."

City officials are preparing a letter to local shareholders, explaining Anheuser-Busch's economic importance to the region and urging stockholders to take it into account if and when they vote their shares on a takeover bid.

"We're certainly not going to go quietly," he said.

While Anheuser-Busch has made strides to cut costs in the face of rising ingredient prices, InBev has a reputation for making new operations as lean as possible.

"The way InBev does it, they send in the surgeons and their scalpels are sharp. And they cut and cut," said Juli Niemann, an analyst with Smith Moore in St. Louis.