InBev closes Bud deal, becomes No. 1 brewer
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. Continued...
