InBev cautions Bud about striking Modelo deal

NEW YORK Sun Jun 15, 2008 5:39pm EDT

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NEW YORK (Reuters) - Belgian brewer InBev NV INTB.BR on Sunday cautioned U.S. rival Anheuser-Busch (BUD.N) that it should fully explore its $46 billion takeover offer before striking out to do any potential deal with Mexico's Modelo (GMODELOC.MX).

InBev, whose beers include Stella Artois and Beck's, on Wednesday made a $65-a-share unsolicited bid to buy Anheuser-Busch, which brews the popular Budweiser brand. A deal would create the world's largest brewer. St Louis, Missouri-based Anheuser-Busch responded that its board would evaluate the proposal carefully.

On Friday, The Wall Street Journal, citing people familiar with the matter, reported that Anheuser-Busch had begun talks with Mexico's No. 1 brewer, Grupo Modelo, about a possible combination of the two companies that could help it thwart the Inbev bid.

Anheuser-Busch owns a 50 percent stake in Modelo, maker of Corona beer, which is emerging as a critical power broker in the battle for control of Anheuser-Busch.

In a letter dated Sunday, Inbev's Chief Executive Carlos Brito told Anheuser-Busch's CEO August Busch IV that he was committed to a "friendly combination."

But he said: "We have read the recent press reports suggesting that you may have approached Grupo Modelo regarding a possible transaction between Anheuser-Busch and Grupo Modelo or affiliated entities."

He said it was important that Anheuser-Busch understood that Inbev's offer was "made on the basis of Anheuser-Busch's current assets, business and capital structure."

"Accordingly, we would expect that prior to proceeding with any alternative transaction, especially if your shareholders will not be given the opportunity to vote on it, you would first fully explore our offer and the potential adverse consequences any such transaction could have on the ability of your shareholders to receive our premium offer," he said.

Brito added that InBev believed that no alternative transaction Anheuser-Busch could clinch would create more value for its shareholders than the $65-per-share in cash it is offering.

"We are convinced that your shareholders would reach the same conclusion," he wrote.

Anheuser-Busch was not immediately available for comment.

(Additional reporting by Nicole Maestri; Editing by Jonathan Oatis)

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