InBev played smart to win defenseless Anheuser

By Jessica Hall and Martinne Geller

PHILADELPHIA/NEW YORK (Reuters) - InBev NV, armed with financing and promises to protect Anheuser-Busch Cos Inc's heritage, pursued its $52 billion target as a chess game with the final checkmate victory foreseen from the first move.

"The speed and efficiency with which InBev INTB.BR mounted its attack on A-B (BUD.N) and got a deal done just $5 (per share) above its initial bid price is impressive," Credit Suisse beverage analyst Carlos Laboy wrote in a research note on Monday.

InBev moved gently from the start, meeting with Anheuser Chief Executive August Busch IV in June 2 in Tampa to discuss a possible combination. It followed with an unsolicited offer on June 11 that included several concessions to soothe any pain for Anheuser-Busch.

Among the concessions in the initial $65 per share bid, InBev offered Anheuser seats on the combined company's board; promised to keep Anheuser's St. Louis, Missouri, home as the North American headquarters; and have the merged company's name reflect the heritage of the more than 150-year-old U.S. brewer.

InBev also said it would keep Anheuser's U.S. breweries open. The Belgian-based company kept all of those promises in the final agreement to buy Anheuser for $70 per share, creating the world's largest brewer which would be named Anheuser-Busch InBev.

"It was pretty much the standard example of how to acquire a company in an agreed deal when they weren't up for sale. The AB board did well, but the InBev tactics were spot-on in that they didn't have to face a messy, long drawn-out battle," said one source close to the deal.

"On the financing side in these difficult markets, they did well to pull together a high-class bank group," the source said.

FINANCING, POLITICS, LAWSUITS

Immediately after news of the possible deal leaked in the press, InBev's Chief Executive Carlos Brito met with U.S. politicians to ease any concerns about an international company buying the American icon and brewer of Budweiser beer.

"The InBev team played a good game in Washington. The first thing Brito did after it was leaked was to get over there and see the relevant senators," the source said. "Even though (Democratic presidential candidate Barack) Obama came out and spoke against it, that was contained."

InBev, though, reiterating through the month-long battle that it wanted to negotiate a friendly deal, showed that it would also push hard and set the stage to try to replace Anheuser's board. InBev proposed a slate of nominees that included Adolphus Busch IV, an uncle of Anheuser-Busch's current chief executive.

BUD'S WEAK SPOTS

Although some analysts credit InBev with running a smart campaign, others said that Anheuser had few defenses and was ripe for takeover given the slow growth of the U.S. beer market, the founding family's small stake and the brewer's weak performance.

"BUD made big missteps, but it made them two years ago when they declassified the board. Once BUD did that, they were always a sitting duck," said Andy Baker, a special situations analyst with Jefferies & Co Inc. "InBev won because all the pieces lined up."

Anheuser-Busch let their poison pill expire in 2004, and they declassified their board in 2006, according to FactSet MergerMetrics.