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InBev Will Take Budweiser Global, CEO Says

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The New York Times

Published: July 15, 2008

FRANKFURT, Germany - Now that a Belgian brewer has conquered the King of Beers, it wants to take Budweiser global.

On Monday, hours after Anheuser-Busch accepted a sweetened $52 billion takeover offer by InBev, ending a monthlong standoff, the Belgian company's chief executive, Carlos Brito, laid out ambitious plans to expand Budweiser into Europe, Asia and Latin America.

But InBev also seems to have other matters on its mind. Most analysts focused on the cost savings that the company will wring out of Anheuser-Busch, which is based in St. Louis, rather than on the opportunities to expand Budweiser or its sister beer, Bud Light, overseas.

"They don't need tremendous success with Budweiser around the world," said Wim Hoste, an analyst at KBC Securities in Brussels. "The transaction can be justified by the synergies on the cost side."
InBev said putting the brewers together would save $1.5 billion by 2011, the bulk of that from cuts that Anheuser-Busch identified during its campaign to fend off InBev's unsolicited bid.

In trying to make itself more valuable than InBev's initial offer of $65 a share, Anheuser planned to cut $1.095 billion in costs by, among other measures, eliminating 1,185 jobs and streamlining its supply chain.

Last week, responding to an overture by Anheuser-Busch, InBev raised its all-cash offer to $70 a share. In talks over the weekend, the two sides resolved other delicate issues like the name of the company, which will be Anheuser-Busch InBev.
InBev pledged not to shut down any of Anheuser-Busch's 12 breweries in the United States. And it gave two board seats to Anheuser-Busch representatives, one of which will be taken by August A. Busch IV, the scion of the Busch family and the company's chief executive.

"While the process was at times difficult for all parties," Busch said of the negotiations in a conference call with reporters, "in the end, the right outcome happened for everyone."

Brito of InBev added, "We're very happy this transaction turned out to be a friendly one." He said the company planned to use Anheuser-Busch's cost-cutting plans as a blueprint for combining the two brewers, saying he was very impressed with how detailed they were.

Shares of Anheuser-Busch rose 37 cents to $66.87 in New York, while InBev fell 3.4 percent in Brussels.

Raising the bid was wise, analysts said, because it might mute a political reaction in the United States, where Budweiser is a celebrated name. InBev's unsolicited offer had provoked opposition from politicians in Missouri, and Sen. Barack Obama, the presumptive Democratic nominee, said he favored keeping the company independent.

Brito said Anheuser-Busch InBev would be the world's third-largest consumer products company by market value, behind only Procter & Gamble and Nestle. But he did not put a number on the sales that could be generated by a global Budweiser, saying he wanted to be conservative.

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