InBev makes $46.4 billion bid for Anheuser Busch

One of the most prominent family-run companies in the United States, Anheuser-Busch, has formally become the target of a $46.4 billion unsolicited takeover offer from the Belgian brewer InBev in a deal that would shake up the global beer industry.

A deal, if reached, would combine Anheuser-Busch's best-selling brands Budweiser and Bud Light with InBev beers like Stella Artois, Beck's and Bass and would create the world's largest brewer, with distribution channels around the world.

InBev's bid of $65 a share is likely to set off a bitter battle for control of Anheuser-Busch, which is based in St. Louis, Missouri, and has been led by the Anheuser and Busch families for 148 years. The company, controlled by a scion of the Busch family, August Busch 4th, has signaled that it will fight a takeover. In recent weeks, in anticipation of InBev's bid, Anheuser-Busch has hired bankers, lawyers and other advisers to help it mount a defense.

The battle may provoke a debate in the United States filled with patriotic fervor over a company ingrained in the American consciousness. Anheuser-Busch spends more money than any other advertiser during the Super Bowl, the American football championship game; last year alone, it spent $23.9 million, according to TNS, a market research company.

The bid could also put Warren Buffett, Anheuser-Busch's second-largest shareholder, after August Busch 3rd, a former Anheuser-Busch chairman and chief executive, in the middle of a contentious fight.

The Missouri governor, Matthew Blunt, said in a statement Wednesday that he opposed any sale.

"Today's offer to purchase the company is deeply troubling to me," he said. Blunt added that he was directing the Missouri Department of Economic Development to explore ways to keep Anheuser-Busch in St. Louis.

But the deal might be harder for investors to resist.

"It's a strong strategic fit. There's little overlap," said Rob Mann, consumer stocks analyst at Collins Stewart in London. "InBev lacks a killer brand, and this gives it to them with Bud. And it also gets Anheuser-Busch out of a hole."

The offer could rise to $70 a share, Mann said, adding that any price above that level would be hard to sell to InBev investors.

Two InBev directors approached Busch about a deal at a secret meeting in Tampa, Florida, on June 2.

The meeting, which people briefed on it described as "polite and short," was a prelude to InBev's formal offer, made in a letter to Busch and the Anheuser-Busch board. InBev said it hoped to reach a friendly deal and, in that spirit, said that it hoped to "keep the contents of this letter private." Within hours, however, word had spread across Wall Street, and Anheuser-Busch chose to make the bid public.

For weeks, hedge funds and arbitrageurs have been buying up shares of Anheuser-Busch, pushing its stock up more than 11 percent in the last two weeks.

In morning trading Thursday, shares of InBev were up €1.64, or 3.7 percent, at €48.93, or $75.44, on Euronext in Brussels. Still, for the year to date, the shares are down 14.2 percent.

Most InBev investors would welcome the entry of Buffett into their company. Some, who had bought the stock for its internal growth prospects and exposure to emerging markets, may be less enthused by the deal.

Shares of Anheuser-Busch closed at $58.35 on Wednesday but rose as much as 10 percent in after-hours trading.

In a brief statement, Anheuser-Busch said its board would review the proposal and make a decision "in due course."

Consolidation has been the watchword within the beer industry for years as breweries have sought economies of scale. The world's two largest brewers are the products of trans-Atlantic deals struck over the past decade: SABMiller from South African Breweries' 2002 purchase of Miller Brewing, and InBev from the 2004 union of InterBrew of Belgium and AmBev of Brazil.

The rise in the prices of grain and other ingredients has added impetus to merger efforts.

But American brewers have struggled in recent years as their customers drift toward wine and spirits, as well as craft beers and imports. That has tempted the international brewers. SABMiller and Molson Coors have combined their operations in the United States, forming a formidable rival to Anheuser-Busch.

One of Anheuser-Busch's potential countermoves would involve buying the 50 percent of the Mexican brewer Grupo Modelo that it does not already own. That would raise Anheuser-Busch's price tag, potentially deterring a buyer.

InBev has been planning its bid for Anheuser-Busch for months, according to people briefed on the matter. Despite a relatively barren environment for deal financing, the Belgian company has already lined up lender commitments from eight international banks, including JPMorgan Chase, Banco Santander and Deutsche Bank.

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