InBev offers to buy Anheuser-Busch; probably won't improve beer quality

[The Ozzman]

http://www.reuters.com/article/marke...0080613?rpc=44

BRUSSELS (Reuters) - InBev began courting Anheuser-Busch owners and staff on Thursday and its stock rose strongly after it made a $46.3 billion bid to add Budweiser to its own Stella Artois and Beck's beers and create the world's largest brewer.

InBev Chief Executive Carlos Brito said he is aiming for a friendly deal as he sought to reassure managers and staff of the biggest U.S. beermaker and vowed to keep the home of Budweiser, America's "King of Beers," in St Louis.

"Our objective is to reach a friendly agreement with their board ... We think their board will act in the best interests of shareholders," Brito told a conference call with analysts.

He said the cash offer at $65 per Anheuser) share was full and fair and would boost InBev earnings in the second full year after a deal, but many analysts said the Belgian brewer may have to pay $70 a share to win over Anheuser shareholders.

Brito said InBev would look at non-core asset sales and although he was unwilling to specify, analysts say these could include Anheuser's SeaWorld and Busch Gardens entertainments division and its packaging supply business, which broker Lehman Brothers has valued together at around $3.8 billion.

InBev stock was up 6.7 percent at 50.5 euros by 11:05 a.m. EDT after it said it would finance the deal with a minimum of $40 billion of debt and thus less equity than had been expected.

A deal would bring together InBev with its big operations in Western Europe, Brazil and Canada with Anheuser's businesses in the United States, Mexico and China, and fuse the second- and fourth-largest brewers to overtake world leader SABMiller Plc.

Sources close to the deal said Anheuser's best defense was to stress value and it was expected to reject the first bid. However, with no obvious rival bidders, any increase in the bid price might be limited, they added.

But according to the Wall Street Journal, Anheuser is in preliminary merger talks with Grupo Modelo, the Mexican brewer in which it owns a 50 percent stake. It is aiming to use a tie-up with the maker of Corona beer to thwart a takeover by InBev. Modelo declined to comment and Anheuser was not immediately available.

Shares in Anheuser, which counts Warren Buffett's Berkshire Hathaway (BRKa.N: Quote, Profile, Research, Stock Buzz) as its second-largest shareholder with a 5 percent stake, closed up 5.2 percent at $61.40. Shares in Brazil's AmBev (AMBV4.SA: Quote, Profile, Research, Stock Buzz) and Mexico's Modelo (GMODELOC.MX: Quote, Profile, Research, Stock Buzz) also rose.

Brito said a successful deal would lead to a cut in InBev's dividend over the next two to three years and said it was premature to talk about cost savings. Analysts have estimated these at around $1.4 billion per year.

Anheuser's main business is in the United States, where it derives over 80 percent of its sales from its 48 percent share of the beer market, but where heightened competition is likely as U.S. No. 2 and No. 3 players SABMiller and Molson Coors (TAP.N: Quote, Profile, Research, Stock Buzz) form a brewing joint venture.

"The deal obviously makes sense for InBev. Apart from the perfect geographical fit ... the new combination would (also) have one of the best brand portfolios in the world," Degroof analyst Marc Leemans said in a research note.

BUSCH FAMILY

Anheuser, which also makes Bud Light and Michelob beers, says it will consider its response in due course, but Chief Executive August Busch IV has said he does not want to sell the company, although the Busch family owns just 3.5 percent.

For most of the last century and a half, since Adolphus Busch, a German immigrant, married Lilly Anheuser and went to work at her father's brewery, the U.S. brewer has been led by members of the Busch family.

SABMiller said a link-up between InBev and Anheuser would not dramatically change the global brewing competitive market, confirming analysts' assumptions that the deal is unlikely to face legal hurdles from competition authorities.

"We do not think this changes the competitive landscape dramatically given Anheuser-Busch's small presence outside the United States," an SABMiller spokesman told Reuters.

The global beer industry is undergoing a wave of consolidation, with Scottish & Newcastle split up by Carlsberg A/S and Heineken NV, and the SABMiller and Molson Coors joint venture in the United States.

If the deal goes through it will be the largest takeover this year, and the third-largest foreign takeover of a U.S. company ever. The scale of the deal was such that dealers said news of it supported the dollar on foreign exchange markets.

InBev is being advised by Lazard and J.P. Morgan, while sources familiar with the situation have said Anheuser has hired Goldman Sachs and Citigroup.

[Belligerent]

As long as Miller doesn't get in on this I'm fine with it.

[The Ozzman]

Miller won't. SABMiller is Miller's parent LDO

[rms]

budweiser is one of the few beers I enjoy

[Belligerent]

If I'm drinking cheaper beer it's usually Bud Light or If I'm out at a bar and they don't have Sam Adams or anything good on tap it's BL.

[Einherjar86]

There's a gas station near my apartment that sells eighteens of Busch for $9.99. Good deal in my opinion, so I usually get that if I'm having guests over. If it's only me and my roomates, we usually head out to the Beverage Castle for microbrews and foreign beers.

Is the price of Busch going to be effected by this?

[Belligerent]

^Kenwood Liquors in Oak Lawn,IL sells 30 packs of Busch or Busch Light for $10.59. You're getting ripped off brother!

[The Ozzman]

Holy fuck, how is a 30 pack of Busch Light cheaper in IL than it is in OH.

FUCKING SHENANIGANS!

[Belligerent]

Cheapest Liquor store in all of Illinois. You should stop there when you're in town