InBev closes Bud deal, becomes No. 1 brewer

NEW YORK Tue Nov 18, 2008 2:07pm EST

Related Topics

NEW YORK (Reuters) - InBev NV INTB.BR has closed its purchase of U.S. brewer Anheuser-Busch Cos Inc (BUD.N) to create the world's largest brewer in the biggest cash acquisition in history, despite a global financial crisis that has stymied other deals.

As of Tuesday, the maker of Stella Artois and Beck's will be known as Anheuser-Busch InBev. Its shares will trade on the Euronext Brussels stock exchange under a new symbol, ABI, starting November 20.

Shares of Anheuser-Busch, maker of Budweiser and Michelob, have ceased trading on the New York Stock Exchange pending their acquisition by InBev for $70 per share, or a total of $52 billion.

The combined company will brew about a quarter of the world's beer and generate about $36 billion in annual sales, helping regain its position as the world's top brewer. InBev lost the title last year to London-listed SABMiller Plc (SAB.L).

InBev, known for fierce cost-cutting, must now deliver on its financial promises, which include cutting at least $1.5 billion in annual costs in three years, or by 2011.

According to Reuters Loan Pricing Corp, InBev has received $54.8 billion in financing for the deal, including a $45 billion jumbo loan and a $9.8 billion loan bridging to an equity issue the company must get done within six months of the closing. InBev postponed an issue in mid-October due to market volatility.

InBev's loan is being arranged by Bank of Tokyo-Mitsubishi UFJ, Barclays Capital, BNP Paribas, Deutsche Bank, Fortis, ING, JP Morgan, Mizuho, Royal Bank of Scotland and Santander, RLPC said.

Analysts were concerned about the fate of the deal after a global credit crunch made loans harder to come by and caused a major realignment of the worldwide banking industry.

Anheuser-Busch InBev also has a $7 billion bridge loan for 12 months until it sells some assets.

PRIZED ASSETS

In addition to breweries, Anheuser-Busch, based in St. Louis, Missouri, owns a packaging business and theme parks including SeaWorld and Busch Gardens.

"We have a list of five assets that are prized assets. From what we see today we only need to sell two or three to get to the $7 billion," said Chief Executive Carlos Brito in a video interview featured on the company's website.

"We already have some people, in spite of the credit crunch, that have consistently approached us ... who are interested in the assets that we could have on our disposal list."

Brito also said the rationale of the deal -- getting control of nearly half of the world's most profitable beer market, the United States -- was intact, despite the financial crisis that erupted in September, causing consumers to cut back on discretionary purchases.

"What changes with the new economic environment is that we will have to work harder," Brito said. "The good thing, though, in our industry is that beer tends to be very resilient in tough times."

"The other positive is that we have a very talented group of people that are really used to working in a lean type of organization," Brito added.

But InBev has promised to keep all of Anheuser's U.S. breweries open, as it sought to quell rising political opposition to a foreign takeover of a U.S. icon. InBev also pledged to keep Anheuser's St. Louis home as the combined company's North American headquarters.

The deal's closing came a day after InBev said it had reached a deal with U.S. antitrust regulators to sell the Labatt USA business and associated licenses.

InBev shares rose 1 percent to 29.20 euros in Brussels.

(Reporting by Martinne Geller; editing by John Wallace, Richard Chang)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.