Anheuser-Busch being sold to InBev for $52B
July 14, 2008
According to the Associated Press, the maker of the King of Beers has agreed to go to work for the Belgian brewer InBev SA.
Anheuser Busch Cos. said it had agreed to a sweetened $52 billion
takeover bid from InBev, creating the world''s largest brewer and
heading off what was shaping up as an acrimonious fight for the maker
of Budweiser and Bud Light beers.
The deal, which would also create the third-largest consumer product company, will be called Anheuser-Busch InBev.
The Anheuser-Busch board accepted the higher takeover offer from
Belgian-based brewer InBev SA, according to a joint press release.
For InBev, the maker of Stella Artois and Beck''s, the deal gives an
aggressive company an iconic beer brand -- Budweiser -- to sell into
emerging markets such as China and Brazil where it has already
established a firm footprint.
InBev is currently the world''s second-largest beer-maker, just behind
SABMiller. Swallowing Anheuser-Busch sees it leap ahead, capturing half
of the U.S. beer market and a fifth of China and Russia.
Brito will be chief executive officer of the combined company.
Shareholders will receive $70 a share, a $5 increase over the offer
Anheuser-Busch rejected in June.
Anheuser-Busch shares rose 79 cents to $67.29 in morning trading.
It wasn''t immediately clear how long approval might take. Several
Missouri politicians have expressed concerns about the merger --
especially how it would affect the approximate 6,000 people employed by
Anheuser-Busch in St. Louis.
It also drew the attention of Mexico''s Grupo Modelo. Anheuser-Busch
also owns a 50 percent share in Grupo Modelo, which said in a statement
that its relationship with Anheuser-Busch gives it consent rights to
InBev said it plans to use St. Louis as its North American
headquarters, and that it will keep open all 12 of Anheuser-Busch''s
North American breweries.
It has not said whether it will cut more jobs on top of the 1,185
positions Anheuser-Busch already said it wants to shed -- mostly by
offering early retirement.
It will, however, sell off "noncore assets" from both companies to
raise some $7 billion to finance the deal. It will also borrow $45
billion and may sell shares to raise another $9.8 billion.
Shareholders won''t see much joy in the short-term. InBev warned of
lower dividends and no benefit to earnings per share until 2010.
But it is promising longer-term rewards in a stalling market. Beer
sales in North America and Europe are flat as drinkers turn to wine and
spirits. InBev has compensated by finding new drinkers in Latin
America, eastern Europe and Asia that will now be handed a cold Bud.
InBev cost synergies of at least $1.5 billion a year by 2011 over three
years. Most of that will come from managing the supply chain better.
InBev''s sharp eye on costs -- which forces managers to justify every
cent spent -- will also play a major part.
The recent kiss-and-make-up announcement from both companies came after
several weeks of guns blazing. InBev said on June 11 it wanted to buy
Anheuser-Busch, which distributes its beers in the U.S.
Anheuser-Busch shrugged off the first offer as two low, prompting InBev
to seek the removal of all Anheuser''s board members. Anheuser
counterattacked, calling InBev''s bid an "illegal scheme" because the
company failed to mention that it owned a brewery in Cuba.
Few products are associated with America as much as Budweiser, which
its owner calls the King of Beers. Its Clydesdale horses are fixtures
of Super Bowl ads, and even the label is red, white and blue, with an
eagle swooping through the "A."
To some in St. Louis, losing Anheuser-Busch to a foreign buyer meant
losing a little bit of history. From college buildings to theme parks
to offices to the stadium where the Cardinals play baseball, the Busch
name is virtually everywhere in the Gateway City.
Despite more than 600 years of brewing beer in Belgium, InBev is more
rootless. Although based in Leuven, Belgium, it is run by a Brazilian
management team and sells most of its beer outside Europe.
It owns a massive portfolio of local brands from Siberia to Argentina
that rarely travel. InBev has only recently started to push its two
best-known brands -- Stella Artois and Beck''s -- more widely.