Fresh Brew

Brussels/New York, July 14 (Reuters): The US brewer Anheuser-Busch has accepted a $52-billion takeover bid from Belgium-based InBev NV to create the world’s largest beer maker and end a month-long standoff.

InBev, which makes Stella Artois and Beck’s, agreed to pay $70 per share for the maker of Budweiser, up from its original unsolicited bid of $65 per share, both the companies today said. The improved offer marked a 27 per cent premium to Anheuser’s record-high stock price in October 2002.

The deal would be the largest in the industry and the third biggest foreign takeover of a US company ever.

The combined company Anheuser-Bush InBev would have about $36.4-billion annual net sales, about 40 per cent in the US, and would brew about a quarter of the world’s beer. InBev chief executive Carlos Brito will be the CEO of the new company, while Anheuser will get two seats on its board.

Brito said the beauty of the deal lay in adding Anheuser’s near 50 per cent share of the US market and taking its Budweiser brand global.

“It’s about complementarity, not about overlap,” he said.

Anheuser’s hometown of St Louis, Missouri, will be the headquarters for the North American region and the global home of the flagship Budweiser brand. The companies said all of Anheuser’s 12 US breweries would remain open.

Peace at last

The deal brings an amicable resolution to a month-long saga that was becoming increasingly hostile as the companies traded lawsuits and InBev set the stage to replace Anheuser’s board.

Anheuser CEO August Busch IV had said he would not sell the company and Brito maintained his stand of not going higher.

InBev shares were up 3.4 per cent at 46.02 euros in mid-morning trading on Monday. Shares of InBev and Anheuser surged on Friday as news of the higher offer and the negotiations emerged. Anheuser closed up 8.6 per cent at $66.50 and InBev ended 7.4 per cent higher.

“The synergies are better than expected, $70 is a reasonable price and InBev has avoided a long drawn-out battle in the courts,” said Wim Hoste, an analyst with KBC Securities. The companies said the combination would yield cost synergies of at least $1.5 billion annually by 2011, to be phased in equally over three years.

InBev will finance its purchase with $45 billion in debt, including $7 billion bridge financing for divestitures. It also has six months to determine additional equity financing with a further bridge of up to $9.8 billion set up.

“Anheuser-Busch knows the US market a lot better than InBev, so InBev needs to retain key management from Anheuser for marketing and distribution,” Morningstar analyst Ann Gilpin said.

To Gilpin, Anheuser shares were only worth $57 on a standalone basis, but she said $70 was a fair price since InBev would be able to cut costs and sell Budweiser and Bud Light — the world’s two top-selling beers — overseas.

The transaction, due to be completed at the end of the year, should have a neutral effect on normalised earnings per share in 2009 and boost earnings from 2010, the companies said.