InBev buys Bud for $52 billion
BRUSSELS/NEW YORK (Reuters) - U.S. brewer Anheuser-Busch Cos Inc <BUD.N> accepted a sweetened $52 billion takeover bid from Belgium-based InBev NV <INTB.BR> 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 companies said on Monday. The improved offer marked a 27 percent premium to Anheuser's record-high stock price in October 2002.
The deal, which InBev and analysts expect to gain regulatory approval, would be the largest in the industry and the second-biggest ever foreign takeover of a U.S. company.
The combined Anheuser-Bush InBev would have about $36.4 billion in annual net sales, about 40 percent in the United States, and would brew about a quarter of the world's beer.
InBev Chief Executive Carlos Brito will be CEO of the new company while Anheuser will get two seats on its board, one of them for current Chief Executive August Busch IV.
Brito told a conference call that the beauty of the deal lay in acquiring Anheuser's near 50 percent share of the U.S. market and in taking its Budweiser brand global.
"It's all about complementarity and not overlap," he said.
Anheuser's home town of St. Louis, Missouri, will be the headquarters for the North American region. The companies said all of Anheuser 12 U.S. breweries would remain open.
FRIENDLY END TO MONTH-LONG BATTLE
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 shares were up 1.07 percent at $67.21 at 10:26 a.m. EDT, having surged 8.6 percent on Friday as news of a higher offer and talks emerged. InBev was off 2.2 percent at 43.51 euros, following a 7.4 percent rise on Friday, and as a potential rights issue weighed on the stock.
"The synergies are better than expected, $70 is a reasonable price and InBev has avoided a long drawn-out battle in the courts," said KBC Securities analyst Wim Hoste in Brussels.
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 will also issue $9.8 billion of new shares.
Chief Financial Officer Felipe Dutra said a rights issue would be the 'natural way' to raise capital.
Morningstar analyst Ann Gilpin said each side would benefit.
"Anheuser-Busch knows the U.S. market a lot better than InBev, so InBev needs to retain key management from Anheuser for marketing and distribution," she said.
To Gilpin, Anheuser shares were only worth $57 on a stand-alone 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 normalized earnings per share in 2009 and boost earnings from 2010, the companies said.
Another dimension to any deal was Mexico's No. 1 Grupo Modelo <GMODELOC.MX>, which is 50 percent owned by Anheuser.
Brito said InBev was in talks with the maker of Corona and believed the two companies could be "great partners."
BEER CONSOLIDATION
After the merger InBev will regain the world brewing top spot it lost last year to SABMiller <SAB.L>, which was boosted by strong growth in China and the purchase of Grolsch.
It is also the latest mega deal in the fast consolidating beer industry, with Scottish & Newcastle having agreed to be broken up by Carlsberg A/S <CARLb.CO> and Heineken NV <HEIN.AS>.
Analysts believe SABMiller will now look at possible deals with Mexico's Modelo or FEMSA, Foster's or Molson Coors <TAP.N>, with whom it has agreed to merge U.S. operations.
InBev, known for fierce cost-cutting, must now deliver on its financial promises while dampening concerns of workers and politicians, including democratic presidential candidate Barack Obama who said it would be a shame if Bud were foreign owned.
(Additional reporting by Jessica Hall; Editing by avid Holmes and Sue Thomas)
