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Belgian Brewer Bids $46 Billion For Anheuser-Busch

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The Associated Press

Published: June 12, 2008

ST. LOUIS - Anheuser-Busch Cos., the nation's biggest brewery, received a $46 billion buyout offer Wednesday from a Belgian brewer that might be too good to refuse.

The maker of Budweiser beer disclosed late Wednesday that InBev SA, whose brands include Beck's, delivered an unsolicited all-cash bid of $65 a share. It's unclear whether senior Anheuser-Busch executives think the deal makes sense, but shareholders may be drawn to the offer that represents a sizable premium over the company's closing price of $58.35 Wednesday.

"Anheuser-Busch said that its board of directors will evaluate the proposal carefully and in the context of all relevant factors, including Anheuser-Busch's long-term strategic plan," the company said in a statement. "The board will pursue the course of action that is in the best interests of Anheuser-Busch's stockholders."

Speculation has been rife in past weeks that a takeover bid was coming. The beer industry has been consolidating in recent years.

Shares of the U.S. brewer surged almost 8 percent to $62.84 after hours, when the announcement was made.

The Busch Entertainment Corp.'s holdings include Busch Gardens in Tampa and SeaWorld in Orlando.

Opposition to a potential takeover has already been fierce in Anheuser-Busch's hometown of St. Louis, and elsewhere in the United States. The brewer employs 6,000 people in St. Louis, and many workers are worried InBev will cut jobs.

Web sites have sprung up opposing the deal on patriotic grounds, arguing that such an iconic U.S. company shouldn't be handed over to foreign ownership. Republican Gov. Matt Blunt said Wednesday he opposes the deal.

"I am strongly opposed to the sale of Anheuser-Busch, and today's offer to purchase the company is deeply troubling to me," Blunt said.
InBev was formed in 2004 when Belgium's Interbrew merged with South America's biggest brewer, AmBev. Since then, the company has cut jobs in several European countries even as its sales were boosted by strong demand in Latin American countries.

Worries about job cuts at Anheuser-Busch could be justified. InBev has a reputation for squeezing costs out of the companies it acquires, said Benj Steinman, editor of the Beer Marketer's Insights trade publication.

"One theory is that their own cost reductions are winding down in Europe and Asia and around the world, and they need somewhere to sort of implement what they're best at," Steinman said.

Anheuser-Busch executives have made cost-cutting a goal during the past two years. Sales in the United States have been stagnant as consumers turn toward wine and cocktails, and the rising costs of ingredients have bitten into profit margins.

Last year, Anheuser-Busch turned a profit of $2.12 billion, up nearly 8 percent from $1.97 billion in 2006. But its core brands of Budweiser and Bud Light continued to lag as sales of craft beers and imports rose.

While the InBev deal looks sweet on paper, it's far from a sure thing.

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