InBev's higher offer likely to get deal done

By Jui Chakravorty Das and Aarthi Sivaraman Guruprasad

NEW YORK (Reuters) - They've called each other names. They've slung mud at each other. One has tried to oust the other's board. But you might expect the two to pop open a can of beer to celebrate a merger. Soon.

According to media reports, InBev NV INTB.BR has raised its offer price to buy Anheuser-Busch Cos Inc BUD.N to $70 a share from the $65 it had originally offered -- which Anheuser spurned two weeks ago, saying it "substantially undervalues" the company.

InBev responded by seeking to oust the American brewer's board, while Anheuser accused the Belgian-Brazilian brewer of lying about its financing commitments and even criticized it for having operations in Cuba.

But two weeks later, with an offer that has gone from $46.3 billion to $49.9 billion, things have gone from not-so-friendly to friendly.

The two parties are said to be in talks now with an offer of $70 a share on the table, reflecting a premium of about 33 percent from Anheuser's closing price on May 22, a day before the rumors of the takeover surfaced.

The new offer -- neither too frothy nor too flat -- makes for a compelling case for the board to recommend the deal.

Joel Greenberg, a partner at law firm Kaye Scholer, declined to comment on this specific deal but said: "Typically shareholders will accept a price recommended by the board. Once a deal goes friendly, it's very likely the board recommends it."

According to the New York Times, some of Anheuser's largest shareholders, including Warren Buffet -- who owns a 5-percent stake in the brewer -- are already leaning towards backing the deal with InBev.

Stephen Jarislowsky, chairman and CEO of Jarislowsky, Fraser Ltd, whose firm owned 1.7 million Anheuser shares as of March 31, said he would fully support a $70-a-share offer.

"I think it's perfectly fine. I don't think it's more than I could hope for; I think it's what they can afford."

One banker who declined to be identified said he expects a quick conclusion and a friendly deal.

"At a time when Anheuser wants to be seen as cutting costs to boost share value, it cannot really be spending time, effort and money on what could become a costly and protracted takeover fight," the banker said.

DISTRIBUTORS

Getting a deal done in a friendly manner now is also Anheuser's best chance at keeping its senior management intact and InBev's best shot at avoiding alienating the U.S. brewer's distributors.

"One of the key reasons why Budweiser is so valuable is its distribution network," said Robbert Van Batenburg, head of research at Louis Capital Markets.