InBev closes Bud deal, becomes No. 1 brewer

Bud Light and Budweiser beer is shown in a cooler at the Toluca Mart liquor store in Los Angeles, California June 16, 2008.

NEW YORK (Reuters) - InBev NV INTB.BR 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, the 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).

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

"Given the environment, I think they've got to be pretty pleased they got this done," said Edward Jones analyst Jack Russo, who had expected the takeover to be delayed like Altria Group Inc's (MO.N) proposed purchase of UST Inc UST.N.

Now InBev can "move on and start the integration process, which given ... Mr. (Carlos) Brito and his history, probably started this morning. He's all business."

Russo guessed the credit crisis may have resulted in higher financing and transaction costs for InBev, but the cost cutting potential was so great the deal still made sense.

Brito, InBev's chief executive officer, must now deliver on his financial promises that include eliminating at least $1.5 billion in annual costs in three years, or by 2011.

According to Reuters Loan Pricing Corp, InBev 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 Banco Santander.

Currency costs also made the deal more expensive as the U.S. dollar has gained strength against the euro. For InBev, whose earnings are denominated in euros, the cost of the $52 billion deal has risen to 41.17 billion euros from 32.69 billion euros when the deal was first announced July 14. in July.

An InBev spokeswoman said in an email that the company was covered, since both the deal and the loans were dollar denominated.

PRIZED ASSETS

Anheuser-Busch InBev also has a $7 billion bridge loan for 12 months until it sells some 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," Brito said in a video interview 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 closed up 1 percent at 29.20 euros in Brussels.

(Editing by John Wallace, Richard Chang, Leslie Gevirtz)