InBev follows Mars in securing big funding

By Jessica Hall

PHILADELPHIA (Reuters) - Beer brewer InBev NV and candy company Mars Inc have proven that there's money available for the right deal and the right brand names.

Despite tight credit markets and fears of looming write-downs at Wall Street banks, InBev INTB.BR secured $40 billion in funding for its bid for U.S. beer brewer Anheuser-Busch Cos Inc (BUD.N).

Meanwhile, Mars recently agreed to buy Wm Wrigley Jr Co WWY.N with the help of $17.2 billion in funding from JPMorgan Chase & Co (JPM.N) and Goldman Sachs Group Inc (GS.N), as well as about $6.5 billion in help from billionaire Warren Buffett.

"These are recession-resistant businesses with steady cash flow and bankable names," said one arbitrageur who declined to be named.

"The 'sin stocks' do well even in a down market. People don't cut back on candy and beer when times are tough. That's the indulgence that people can afford," the arbitrageur said.

InBev, the brewer of Stella Artois and Beck's, said it would finance its $46.3 billion bid for Anheuser-Busch with at least $40 billion in debt and a combination of non-core asset sales and equity financing.

"This is going to be one of the top five global consumer companies. People want to hold the debt," said a source familiar with the InBev offer. "For the right deal in the right industry, banks will come up with the money."

Although borrowing costs are now higher than they were during the leveraged buyout bubble last year, that has not deterred some companies from making strategic acquisitions, investment bankers said.

"InBev is an easy company to finance; it's massively strong and has cash flow everywhere," a second source familiar with the InBev offer said.

InBev said it had funding from Banco Santander SA (SAN.MC), Barclays Plc (BARC.L), BNP Paribas SA (BNPP.PA), Deutsche Bank AG (DBKGn.DE), Fortis NV (FOR.BR), JP Morgan and Royal Bank of Scotland Group Plc (RBS.L).

"A year ago it would have taken four banks to finance it. The only difference is that now it takes eight," the source said.

Merrill Lynch analysts said InBev's offer could be financed completely by debt without any need to raise equity. That helped boost shares of InBev on Thursday.

Shares of InBev closed at 50.21 euros, up 6.2 percent. The stock had been hurt in recent weeks amid investors' concerns that InBev would have to raise as much as $17 billion in a rights issue to help finance the deal, which would have diluted the stock.

STRONG NAMES GAIN SUPPORT

InBev and Mars are not alone in securing mega-billion funding packages. French utility Electricite de France SA (EDF.PA) garnered funding for its $21.4 billion bid for British Energy Group Plc BGY.L, and France Telecom (FTE.PA) got support for its $41 billion offer for Nordic company TeliaSonera AB (TLSN.ST), which was rejected as too low.