It's Official: InBev to buy Anheuser-Busch for $52 billion.

[RaptorQuiz]

So, think they can keep calling it the "Great American Lager?"

LINK: http://www.stltoday.com/stltoday/business/...9F?OpenDocument

A-B's board sells kingdom to InBev for $52 billion

ST. LOUIS POST-DISPATCH

07/14/2008

The board of directors of Anheuser-Busch Cos. on Sunday accepted a $52 billion takeover offer from Belgium's InBev, putting a quick end to a monthlong standoff between the companies. The agreement paves the way for a brewing colossus controlling about a quarter of the world's beer market.

For St. Louis-based Anheuser-Busch, the sale will end a run of independence that stretches back to before the Civil War. The buyout at $70 a share also represents the biggest, boldest acquisition in the beer industry and one of the largest purchases of a U.S. company by a foreign suitor.

"This changes everything," Morningstar analyst Ann Gilpin said. "An InBev/Anheuser-Busch combination will be a very formidable competitor."

The companies announced the agreement in a joint statement late Sunday evening. They said the combined company will be called Anheuser-Busch InBev, and A-B CEO August A. Busch IV and one other current or former member of the Anheuser-Busch board will serve on the new board. Both companies are discussing potential candidates for the second slot.

Both companies' boards unanimously approved the deal.

"We will leverage our collective strengths to create a truly diversified, global company to sustain long-term growth and profitability," Busch said in a statement.

The deal must be approved by both companies' shareholders and is expected to close by the end of the year. InBev said it had "fully committed" financing.

Bent on acquiring the biggest U.S. brewer and its collection of brands, breweries and well-entrenched distributors, InBev sweetened its bid for Anheuser-Busch to $70 a share after offering $65 a share on June 11. By comparison, Anheuser-Busch's average share price for the 12 months before news of the deal surfaced on May 23 was about $50.

The stepped-up price apparently led to negotiations late last week after Anheuser-Busch brushed off InBev's initial offer.

"This is truly one of those win-win situations where everyone should be pleased as punch," said Tom Pirko, president of California consulting firm Bevmark. InBev CEO Carlos Brito "got what he wanted — took down the big prize. And (Anheuser-Busch) shareholders got a major premium that would have been in doubt for a long time to come."

The agreement followed about a month of resistance from Anheuser-Busch, which blasted the initial proposal of $65 a share — equal to about $47.5 billion — as inadequate and not the true value for the company's assets in key markets such as the U.S., China and Mexico.

But the turning point may have been the lukewarm reception that Anheuser-Busch's new strategic plan — ostensibly a bid to remain independent — garnered among investors after it was announced on June 27, analysts said. The ho-hum reception may have pushed Anheuser-Busch's board to negotiate, said bond analyst B. Craig Hutson.

InBev argued that the deal was the next progression in a relationship that stretches back 28 years. The companies now cooperate in South Korea, Canada and the U.S., where Anheuser-Busch imports Stella Artois, Beck's and other InBev brews.

The companies' paths have crossed before, under different circumstances.

Back in 1999, Anheuser-Busch had plans to make a bigger splash in Brazil and the broader South American beer market. The company had a minority stake in Antarctica Paulista, Brazil's No. 2 brewer, and hoped to take majority control.

But Brahma, Brazil's biggest beermaker, persuaded authorities to let it merge with Antarctica, creating a new company called AmBev. Anheuser-Busch sold its stake and watched as AmBev proceeded to merge with Belgian brewer Interbrew to become InBev.

Anheuser-Busch, meanwhile, sat out on several chances to make big international acquisitions that could have kept it on top of the global beer industry. Endowed with a conservative management style, it generally elected to test markets by taking partial stakes in foreign brewers.

InBev, in contrast, established a reputation as one of the beer industry's most audacious takeover machines. Executives have coveted Anheuser-Busch's potential for a long time — perhaps 20 years — and their ambitions go well beyond short-term earnings potential, said Gilpin.

"They're thinking about the next 100 years," she said.

On Wednesday, Brito told the Post-Dispatch that the proposed deal with Anheuser-Busch was a "natural step."

On Sunday, Brito, who will lead the new company, reiterated his company's main selling point: "Together, Anheuser-Busch and InBev will be able to accomplish much more than each can on its own," he said in a statement.

InBev's buyout of Anheuser-Busch could prove revolutionary. The combined company will churn out about 392 million barrels of beer a year, about 60 percent more than rival SABMiller. Anheuser-Busch InBev will boast sales of about $36.4 billion.

The new company aims to save at least $1.5 billion in costs annually by 2011. About 40 percent of its revenues will come from the U.S., where all of Anheuser-Busch's 12 breweries are to remain open.

Anheuser-Busch InBev also will sell noncore assets, though the assets weren't identified. However, analysts believe that InBev will sell off A-B's theme parks and packaging divisions.

St. Louis will be the North American headquarters of the combined companies. Anheuser-Busch has about 6,000 local employees and a Missouri payroll of about $518 million.

Analysts expect the deal to set off another round of buyouts and takeovers as brewers try to keep up and compete with size never before seen in the beer industry.

The combination will give the new company a platform to build the Budweiser brand outside the U.S. as well as scale to wrest more clout with vendors, Brito said during the interview last week.

"We're going to have more importance to suppliers, developers of technology, raw materials," he said. "There are a lot of things we can do together much better."

But the deal seemed anathema for many supporters of Anheuser-Busch in St. Louis, who feared that InBev would prove a harsh taskmaster and wipe out Anheuser-Busch's habit of charitable donations and generous pay and benefits. Many residents were disinclined to believe Brito's assurances that he harbored no hidden agenda.

Missouri's congressional delegation and St. Louis' mayor made known their opposition to the buyout. Similar hostility popped up as far away as Newark, N.J., where last week a sign hung on a fence near Anheuser-Busch's brewery implored: "Keep Budweiser American."

Anheuser-Busch is "the single most influential presence in American brewing history, period. And that's about to end," said Maureen Ogle, author of "Ambitious Brew: The Story of American Beer." The company "has been making significant decisions since the 1860s," she said. It leads, "and everyone else follows."

In the aftermath of InBev's purchase, A-B's influence will diminish, Ogle said. In the resulting disarray, it will face a struggle with MillerCoors LLC, a joint venture of Miller Brewing Co. and Coors Brewing Co. that took effect July 1.

Indeed, A-B's value will fall, "like driving a new car off the lot," she said.

August Busch was quick to argue that Anheuser-Busch's legacy would continue.

"In the end, it is the people that make the business run, and it is those people, and the business potential, that InBev valued when they approached us," he said in an e-mailed response to questions from the Post-Dispatch. "Nothing will change the heritage that represents the foundation of this company."

Anheuser-Busch's managers plan face-to-face meetings with employees over the next few days to discuss the deal. "The new company can only be successful if we leverage the tremendous talent within Anheuser-Busch," wrote Busch.

It is "very important that people don't jump off bridges" in fear of what InBev will do, said Edward Jones analyst Jack Russo.

In any case, the deal could be complicated by Mexican brewer Grupo Modelo, half of which is owned by Anheuser-Busch. Modelo — the biggest brewer in Mexico and the maker of Corona, Modelo Especial and 10 other brands — said it has been in active discussions with InBev about how the two companies can work together if Modelo consents to InBev's becoming a minority owner through its acquisition of Anheuser-Busch.

Modelo said its agreement with Anheuser-Busch gives it a "definitive say" in who its partner is. The brewer said it is confident that the agreement gives it the right to decide whether or not to consent to the takeover of Anheuser-Busch by InBev. The company said it was reserving its contractual rights.

InBev itself is making a major bet that it can make the $52 billion investment — financed with $45 billion in debt — pay off. The wager is that Budweiser can be turned into an even bigger global brand with a big presence in places such as Argentina, Bolivia and the Ukraine. Plus, the deal will help InBev reduce its reliance on Brazil and other high-growth but somewhat volatile markets.

But Brito's company is now saddled with massive debt to repay, said Pirko. Just as the pressure was on Anheuser-Busch to sell out, Anheuser-Busch InBev and its hard-charging CEO will have to deliver on its commitments.

"The next big adventure is to see if Brito can live up to the expectations and expand A-B's brand internationally," said Pirko. "If this turns out to be the next Brahma, you will see hari kari carried out under the Arch," he said, referring to InBev's failed effort to extend the Brazilian beer Brahma worldwide.

The U.S. beer market — of which Anheuser-Busch controlled 51 percent at the end of March — is growing slowly but still represents the world's biggest pool of profits for brewers.

InBev has built its business largely on relentless cost-cutting coupled with a string of acquisitions. But InBev executives have insisted that the main appeal of buying Anheuser-Busch was the potential increase in revenue. They have been largely silent on the magnitude of cost cuts that Wall Street and Main Street expect to follow.

"This is almost going to be like 'Invasion of the Body Snatchers,'" Pirko said. "The new company is going to be very different. It's going to have a very different culture."

Asked whether he thought Anheuser-Busch's wholesalers were as efficient as they could be — and whether he would shake up the network of 600 beer wholesalers — Brito demurred.

"I would change the top line," he said last week.

LINK: http://www.cnn.com/2008/US/07/14/anheuser....v.ap/index.html

InBev to buy Anheuser-Busch for $52B

ST. LOUIS, Missouri (AP) -- Belgian brewer InBev has announced it will buy its U.S. rival Anheuser-Busch for $52 billion to create the world's largest brewer.

The acquisition means control over America's largest brewer, the No. 2 worldwide, moves overseas. Based in St. Louis, Missouri, Anheuser-Busch has more than 48 percent of American market share with brands that include Bud Light.

InBev confirmed the details of the purchase of Anheuser-Busch early Monday. It first bid for Anheuser-Busch on June 11.

InBev is the world's second largest beer maker, with brands that include Stella Artois and Becks.

The deal must be approved by shareholders and European and US antitrust regulators. The merger will produce the fourth-largest consumer product company worldwide.

Anheuser-Busch Cos. Inc. did not return messages seeking comment Sunday evening.

The Wall Street Journal said the deal was for $70 a share, a $5 increase over the offer Anheuser-Busch rejected in June.

It wasn't immediately clear how long approval might take from regulators and shareholders. 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.

InBev has 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.

InBev SA announced its intent to try and purchase Anheuser-Busch on June 11. The Anheuser-Busch board initially voted against the merger, calling the initial $65 per share offer too low.

That prompted much squabbling between the companies over the past few weeks. InBev filed a motion seeking the removal of all 13 Anheuser-Busch board members; Anheuser-Busch filed suit calling the InBev effort an "illegal scheme" that threatened to defraud Anheuser-Busch shareholders. Among other things, the suit noted that InBev failed to disclose it operates a brewery in Cuba.

So it was with some surprise when reports surfaced on Friday that the two companies were sitting down for merger talks, reportedly after InBev upped its offer by $5 to $70 per share.

The merger, if completed, will bring to an end to one of the most iconic names in U.S. business and a name synonymous with St. Louis. From college buildings to offices to the stadium where the Cardinals play, the Busch name is virtually everywhere in the Gateway City.

Eberhard Anheuser acquired the Bavarian brewery in 1860 and renamed it E. Anheuser & Co. His son-in-law, Adolphus Busch, joined the company in 1864 and it was eventually renamed Anheuser-Busch.

The company survived Prohibition by selling products ranging from ice cream to root beer.

In addition to opposition from politicians and civic leaders, at least two Web sites sprung up opposing the merger. SaveBudweiser.com claims to have more than 60,000 signatures from merger opponents. SaveAB.com hosted a recent anti-merger rally that drew hundreds to downtown St. Louis.

InBev has not said if layoffs will occur as a result of the merger. But some cutbacks seem likely.

Even without the merger, Anheuser-Busch said last month it planned to cut pension and health benefits for salaried employees as part of an effort to slash $1 billion in costs by the end of 2010. The plan called for offering early retirement to 1,300 salaried workers 55 and older.

The cost-cutting effort -- dubbed "Blue Ocean" by the company -- was part of a strategy to fend off the merger.

The beer industry has been consolidating in recent years amid rising costs for transportation fuel and key ingredients.

[RaptorQuiz]

Surprised nobody had any comments about this.

[seanzarelli]

Surprised nobody had any comments about this.

That's because Budweiser is schnasty! lol :-)

[SeveredSoulX]

So what - will Busch Stadium now be Busch-InBev Stadium? Haha - na I'm not ripping at that, I used to live in St Louis (avid Cards fan, even down in their AA area [i now live in Springfield haha])

[RaptorQuiz]

That's because Budweiser is schnasty! lol :-)

Yes, it's so "schnasty" that it holds 51% (50.9 to be exact) of the entire American beer market share.

Miller and Coors *together* (MillerCoors LLC) make up less than 29%.

[Yankee4Life]

Surprised nobody had any comments about this.

Didn't know what to think about this, not being a beer drinker and not really being too concerned with the Budweiser company to begin with. What do the local people think about this? Is this good for St. Louis?

[RaptorQuiz]

Didn't know what to think about this, not being a beer drinker and not really being too concerned with the Budweiser company to begin with. What do the local people think about this? Is this good for St. Louis?

Probably good for the health of the company (BUD has had a tendancy to "waste" money on charity, the zoo, Grant's Farm, etc) - you'll notice I had "waste" in quotes, b/c while in a business sense it is a "waste" of money, in a community sense it is part of what made A.B. such a part of St. Louis.

InBev is a ruthless cost cutter. Layoffs galore and any number of other cost cutting measures are expected.

So... for stockholders: This is fantastic.

For the city of St. Louis, in the short term: This probably is bad. Maybe very bad.

Long run: If the company becomes a more solid global competitor, AND they actually *DO* keep the American breweries open, then (in the long run) it might end up keeping the city economically viable.

[DJEagles]

Bud is bad.

The deal is great, but Bud is bad.

[RaptorQuiz]

Silly foreigners. :wink:

I prefer not to have to chew my beer.

[DJEagles]

I just like my beer with a little taste. If I wanted water, I would just drink water. :D

[RaptorQuiz]

I just like my beer with a little taste. If I wanted water, I would just drink water.

That's just it. I like to DRINK my beer. I don't want to have to use a knife and a fork. :wink:

The beer I drink most often is Bud Light, followed by Bud Select, followed by Budweiser (red label).

Then comes Shiner Bock, then comes Blue Moon.

Out of curiosity... what is your poison of choice?

[DJEagles]

I am still not sure what you are getting at. The only difference is the alcohol content. We have a higher percentage...that's it. That's all.

I like Alpine ( A Moosehead Product...purely Atlantic Canada), followed by Molson Canadian.

[BigRog]

Molson Canadian.

that is where it is at.

[wrigleyville33]

Roger you aren't 21...

[seanzarelli]

Out of curiosity... what is your poison of choice?

[Yankee4Life]

Roger you aren't 21...

He probably gets someone to buy it for him when he isn't too busy text messaging or changing the songs on the ipod.

[RaptorQuiz]

Ah yes. Guinness: The beer of pretentious dorks everywhere :wink:

This particular nasty concoction is specifically what I was referring to when I said I don't like having to chew my beer. Especially considering it's meant to be served @ room temp.

Stout = Nasty.

[RaptorQuiz]

He probably gets someone to buy it for him when he isn't too busy text messaging or changing the songs on the ipod.

...while driving.

Yes. Drinking, driving, all while texting.

I'd say this kind of thing would help to thin the herd, but it's just as likely to thin someone ELSE out of the herd in the accident as it is him.

[BigRog]

Roger you aren't 21...

ya but what college kid under 21 doesn't drink?

...while driving.

Yes. Drinking, driving, all while texting.

I'd say this kind of thing would help to thin the herd, but it's just as likely to thin someone ELSE out of the herd in the accident as it is him.

I don't drink that much and when I do it is with my uncles around a campfire talking about life.

As for driving, I am the designated driver. I don't believe in Drinking and Driving. My friends do but I don't. That is why whenever we go to parties I don't drink and I make sure everyone gets home safe.

[wolfy6finger]

Wow, I read about this possibly a few weeks ago and supposedly August Busch and the board were against it, I guess they sold out.

Short and long run this is gonna hurt. Layoffs galore (InBev is known for this) and I bet the small brewery near me (Merrimack, NH) gets closed within two years.

And the choice of beer for me -- used to be Bud Light, but it wrecks my stomach now (of course it good for old Beirut)

Now, I switch often -- going from Yuengling to Blue Moon to Sam Adams(and alot of microbrews were ever I'm at). I love tasting new brew -- I think I had like 9 different brands when I was in Philly that I never had before

[evil1182]

Yes, it's so "schnasty" that it holds 51% (50.9 to be exact) of the entire American beer market share.

Miller and Coors *together* (MillerCoors LLC) make up less than 29%.

Where did you get those numbers from? Just curious.

[RaptorQuiz]

As for driving, I am the designated driver. I don't believe in Drinking and Driving. My friends do but I don't. That is why whenever we go to parties I don't drink and I make sure everyone gets home safe.

Now THAT is to be commended. I am serious, not sarcastic.

A lot of people at younger ages don't really understand the value of a designated driver, and especially *being* one.

But designated drivers save lives.

People that volunteer to be designated drivers for their friends should be given medals.

[RaptorQuiz]

Where did you get those numbers from? Just curious.

Those numbers were the most recent numbers on my in-house research page for the investment firm I work for.

But they have pretty similar numbers on Wikipedia (I just checked).

[wolfy6finger]

That 51% was in one of articles, but I didn't realize Coors and Miller had only 29% combined

[RaptorQuiz]

That 51% was in one of articles, but I didn't realize Coors and Miller had only 29% combined

Yeah, they merged to form MillerCoors in an attempt to better compete with the Anheuser-Busch monster. Now that InBev is buying them - that creates a serious behemoth of a brewing corporation.

Assuming InBev doesn't screw the pooch and ruin Bud's products by changing anything, and they maintain a similarly successful marketing campaign in the US (after all the damage control they're gonna have to do) - this is probably scaring the pants off of other US brewers.

Especially if Modelo can't get out of their contract w/ AB-InBev, and they retain 50% ownership of the Corona brewer. Yikes.