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InBev weighs Anheuser bid but no talks yet
May 27, 2008 / 5:35 AM / 9 years ago

InBev weighs Anheuser bid but no talks yet

BRUSSELS/PHILADELPHIA (Reuters) - InBev INTB.BR has not yet begun merger talks with Anheuser-Busch Cos Inc (BUD.N) but is still weighing an acquisition of the U.S. brewer, a source familiar with the situation said on Tuesday.

<p>A bottle of Budweiser in an undated photo. InBev has not yet begun merger talks with Anheuser-Busch but is still weighing an acquisition of the U.S. brewer, a source familiar with the situation said on Tuesday. REUTERS/Handout</p>

The source also said the board of directors for Belgian brewer InBev has not yet voted on whether it will proceed with an overture to Anheuser, the No. 1 brewer in the United States with brands like Budweiser and Michelob.

InBev has not yet decided, the source said, whether it would look at acquiring other companies in the event an Anheuser deal falls through, as was reported over the weekend by the Financial Times.

Citing a person familiar with the situation, FT reported that InBev and SABMiller Plc SAB.L have been holding informal discussions about a tie-up, but that the progress of those talks was stalled by SABMiller’s plans to merge its U.S. operations with those of Molson Coors Brewing Co (TAP.N).

The beer industry is experiencing a wave of consolidation, with Scottish & Newcastle agreeing to be broken up by Carlsberg A/S (CARLb.CO) and Heineken NV (HEIN.AS).

InBev, formed from the 2004 merger of Belgium’s Interbrew with Brazil’s AmBev, has a fraction of the U.S. market but has mature businesses in western Europe.

It is also present in growth markets in eastern Europe, Asia and Latin America, notably in the key market of Brazil.

SABMiller shares closed Tuesday up 6.9 percent at 13.08 pounds in London, its highest close since January. Anheuser shares closed up 0.3 percent at $56.75 on the New York Stock Exchange.

Shares of InBev, brewer of Stella Artois, Beck’s and Brahma, closed down 1.9 percent at 47 euros, after losing as much as 3.5 percent and hitting a four-month low of 46.23 euros.

Belgian business daily De Tijd reported on Tuesday that InBev’s board of directors was about to decide whether to allow company advisers to start negotiating with Anheuser, without disclosing its sources.

<p>Carlos Brito, chief executive of InBev, holds a glass of Stella Artois beer as he poses for photographers after presenting the company's annual results in Leuven February 28, 2008. REUTERS/Francois Lenoir</p>

An InBev spokeswoman declined to comment on the report and said it was not the company’s policy to divulge when board meetings took place. SABMiller, known for its Miller Lite, Peroni and Pilsner Urquell brands, also declined to comment.

The Financial Times, in its Alphaville blog, also reported on Tuesday that InBev advisors had identified Dutch brewer Heineken and Guinness beer maker Diageo PLC (DGE.L) as alternatives for Anheuser to discuss a deal with.

Officials from Diageo and Heineken were not immediately available to comment.

The Financial Times blog reported on Friday that InBev was considering a $65-a-share bid for Anheuser, and that $50 billion in financing had been provisionally arranged through JPMorgan and Santander. The Belgian company had not excluded a hostile bid, the FT reported.

A Busch family member, Adolphus Busch IV, told the Wall Street Journal on Tuesday that some family members were open to holding talks with InBev, but others wanted to keep the status quo.

Anheuser was not immediately available for comment but has previously referred to its policy of not commenting on rumors concerning acquisitions or mergers.

Wall Street analysts have mostly interpreted Anheuser’s silence on the issue as a display of its desire to stay independent.

The current CEO of the St. Louis-based brewer, who took the helm in December 2006, is the fifth member of his family to run the business, which grew from a regional beer maker into the country’s No. 1 brewer with nearly half the market.

But U.S. sales have sagged in recent years as consumers opt for foreign beers, small-batch “craft” brews, wine and spirits. In order to diversify, Anheuser bought 50 percent of Mexico’s Grupo Modelo GMODELOC.MX and 27 percent of China’s Tsingtao Brewery Co Ltd (600600.SS).

Anheuser also distributes in the U.S. drinks from InBev, Grolsch, and Hansen Natural Corp HANS.O.

“Given the recent appointment of August Busch IV as CEO and a desire to remain independent, we believe Anheuser management would put up a fight,” wrote UBS in a research note. “However we believe Anheuser’s (defenses) are relatively limited. While Anheuser could buy the residual Modelo stake, we do not believe this would necessarily have to be a poison pill for InBev.”

Additional reporting by Martinne Geller, Dan Lalor, Philip Blenkinsop and Eleanor Wason; Editing by Tim Dobbyn

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