Anheuser-Busch Receives $46.3 Billion Bid From InBev

[ginzo]

http://www.bloomberg.com/apps/news?pid=20601087&sid=adu3krOfyl9Q&refer=home

 

June 11 (Bloomberg) -- InBev NV made an unsolicited offer to buy Anheuser-Busch Cos. for $46.3 billion to gain half of the U.S. beer market and overtake SABMiller Plc as the world's biggest brewer by volume.

 

Anheuser-Busch climbed as much as 9.7 percent in late New York trading after saying in a statement today that its board will evaluate the $65-a-share proposal ``in due course.'' InBev said in a separate statement on its Web site that it intends to pay for the purchase with cash.

 

The industry's largest takeover would put InBev's Stella Artois and Leffe brands together with Budweiser, the iconic lager first brewed 132 years ago in St. Louis. In a 20-year acquisition spree, InBev has grown from a collection of family- owned Flemish beers to become the top beermaker by sales, dominating the Latin American market.

 

``The U.S. accounts for almost a third of world beer profit, and there is hardly any overlap'' between the companies, said Marcel Hooijmaijers, an analyst at Landsbanki Kepler in Amsterdam, before the bid was announced.

 

The offer by InBev, led by Chief Executive Officer Carlos Brito, is 24 percent more than Anheuser-Busch's share price May 22, the day before reports said Leuven, Belgium-based InBev was preparing a takeover bid.

 

Anheuser-Busch rose $4.15, or 7.1 percent, to $62.50 at 6:18 p.m. in trading after the close of the New York Stock Exchange. Molson Coors Brewing Co. gained $1.21, or 2.1 percent, to $57.83, and Boston Brewing Co., the maker of Samuel Adams, jumped 82 cents, or 2.1 percent, to $40.55.

 

Anheuser-Busch Chief Executive Officer August Busch IV sent an e-mail to the company's beer distributors acknowledging the bid and saying a decision may take months or longer, according to the e-mail newsletter Beer Business Daily.

 

`Business as Usual'

 

``As soon as we are able to relay the board's decision to you, we will do so,'' the newsletter quoted Busch as saying. ``There is nothing you should be doing, other than continuing to focus on business as usual.''

 

Credit-default swaps tied to Anheuser-Bush's bonds, used to speculate on a company's creditworthiness or to hedge against losses, jumped to a record on concern that InBev would load up the company with debt to fund the takeover.

 

The contracts rose as much as 28 basis points to about 100 basis points before falling back to 86 basis points, according to New York-based Credit Derivatives Research LLC.

 

``The combined company would have significantly more leverage than either one of the two existing companies,'' said B. Craig Hutson, an analyst with Gimme Credit LLC in Chicago.

 

Miller, Coors

 

InBev's bid follows SABMiller's agreement to combine its U.S. division with that of Molson Coors. Anheuser-Busch, the world's biggest brewer for five decades before being overtaken by InBev, has been selling the Belgian company's Beck's and other brews in the U.S. for the past year.

 

While InBev has operations in at least 30 countries and sells in more than 130, it generates less than 1 percent of its beer volume in the U.S. Industrywide sales in the country are almost $100 billion a year, according to Euromonitor Plc.

 

InBev's interest in Anheuser was reported last month in the Financial Times' Alphaville blog. The acquisition wouldn't increase earnings for at least three years, Goldman, Sachs & Co. analysts wrote in a note May 30. A purchase may also harm Anheuser brands should InBev's try to lower costs, Deutsche Bank AG analysts wrote May 26.

 

A combination would save about $450 million a year in marketing, distribution and administrative costs, Credit Suisse Group AG estimated. InBev will add Bud Light with the purchase and create a company with sales of more than $36 billion, based on 2007 revenue.

 

More Mergers

 

Formed by the $11.2 billion takeover of Brazil's Cia de Bebidas das Americas by Interbrew SA, completed in 2005, InBev has sought growth outside of western Europe as consumption in the region slows. SABMiller is the world's biggest brewer by hectoliters sold.

 

Before buying AmBev, which Brito headed, InBev made acquisitions including the 2.3 billion-pound ($4.5 billion) takeover of Bass Brewers Ltd. in 2000 and the C$3.97 billion ($4 billion) purchase of Labatt Brewing Co. in 1995.

 

Anheuser-Busch has been under pressure from investors to expand overseas or add spirits and non-alcoholic drinks after domestic volume dropped 1.8 percent in 2005 before rising 1.2 percent in 2006 and 2.1 percent in 2007.

 

It's going to be very difficult for AB to turn down an offer of this magnitude. No idea what effect, if any, this would have on the AB parks. But, anyway, this is more than a rumor now.

[Bucket]

46.3 BILLION!

 

I doubt they would turn that kind of money down!

[bgeguy]

I just don't see this happening, even though it's a nice amount of moo-la.

 

If it is sold, I think BEC could sustain itself. Last year it had ~$1.6 billion in sales, just from the parks.

[Johnny Upsidedown]

More selling off of america.

 

I have to wonder if this will include the parks. I dont think so...

I remember a couple months back a story about how Busch was building a new head quarters for its parks division and were going to move its park division here to Florida in OlandO.

 

I would think the parks will be keep seperate from the sell of the beer division.

But I dont know... I would hope that the parks would be left seperate other wise it will be the down fall of one of the best park chains out there.

[crazydaveh]

As an AB shareholder, I like the price they're offering, but I like the fact that AB is American owned more than money.

 

If they do take the bid, who knows what will happen with the parks. Will they be sold? Hope not. Will they close? No. Will they operate the same? Who knows!

 

One can speculate that maybe GE is enjoying Universal's profiting and might take the parks off AB's or InBev's hands, maybe Mickey might want to own some of Shamu, maybe Cedar Fair or Six Flags might want to get more into debt and try to compete in Orlando (which they can't cause it's themeing here, not coaster cities). We can come up with any scenario we want, we just don't have a clue what's to come of this.

 

I do know one thing, if they do take the buyout, a lot of old school Bud drinkers will most likely find their way to another watered down brand, cause it won't be American' anymore! If only they could afford Sam Adams... That's a quality beer!

[CHILLERLC1]

I like my Miller but Altria(Phillip Morris - formerly included Kraft) shed them off to the fold of South African Breweries to create that scenario, Bud's bullying over Miller for not being American owned anymore.

[PURE]

I do know one thing, if they do take the buyout, a lot of old school Bud drinkers will most likely find their way to another watered down brand, cause it won't be American' anymore! If only they could afford Sam Adams... That's a quality beer!

 

When it comes to cheap beer I've never understood why people don't just put down the Bud and Miller and crack open a Pabst.

 

I mean, if you're going to drink domestic you obviously don't care about the taste of your beer. Why not save even more coin? 12 pack for 8 bucks? You can't lose! And Pabst tastes even better, IMHO.

 

I'm all about keeping the big companies in America, but you gotta admit, that's a nice chunk of dough. If I was the businessman in charge of this deal, I'd only have one word.

 

SOLD!

[Astat]

InBev has previously stated that they have no intention of assuming operations of the 2 Busch theme parks. I don't have a direct link, but this is from the RCCGB messageboard:

 

Financial analysts are speculating that Busch Entertainment Corporation - the parks division of Anheuser-Busch - may be 'an attractive buyout target' should a brewing company from Belgium progress with a US$46bn acquisition of the US group.

 

According to UK newspaper the Financial Times, InBev is poised to bid for the St Louis-based Anheuser-Busch. It is suggested, however, that InBev would not be interested in operating the company's parks division, which accounts for around seven per cent of AB's $19bn annual revenue.

 

With 22.3 million visitors to its facilities in 2007, Busch Entertainment is the world's fifth biggest park chain. Flagship park Busch Gardens Africa in Florida, with over 4.4 million visitors last year, is in the top 20 best attended parks globally.

[raptorcrew2002]

^ Correct in the past remarks had been made during the talks of, that they wanted nothing to do with the parks. As for if they did worm into this purchase and take it over then yes the theme park operations would be directly effected and either kept or sold off.

 

I really hope they hold off the bid, one thing is for sure the offer should be too low. Now if they would have gone for a 69-72 a share it would be VERY tough to fight.

 

 

The overseas interests are smart to attack with the weakness in the dollar but it’s really kind of getting old and pathetic to see large US companies becoming victims.

 

Did you guys also see who’s trying to buy a huge stake in the Chrysler Building!

http://afp.google.com/article/ALeqM5jTuV_f1OG7AAvygoOcimtQ10zudQ

 

There is a much bigger picture issue too this, theme parks aside.

[mcjaco]

I just don't see this happening, even though it's a nice amount of moo-la.

 

If it is sold, I think BEC could sustain itself. Last year it had ~$1.6 billion in sales, just from the parks.

 

Unfortunately, AB is feeling the crunch under the SABMiller distribution giant. The rumor is that if AB doesn't agree to this InBev will go purchase SABMiller, which will really hurt AB.

 

I think it's a done deal. There's no way they can't do this.

 

Either way, it's all crappy beer. You people need to read the beer thread, where real American beer is brewed (and we drink it), not this moist air in a bottle.

[ginzo]

Unfortunately, AB is feeling the crunch under the SABMiller distribution giant. The rumor is that if AB doesn't agree to this InBev will go purchase SABMiller, which will really hurt AB.

 

I think it's a done deal. There's no way they can't do this.

 

Either way, it's all crappy beer. You people need to read the beer thread, where real American beer is brewed (and we drink it), not this moist air in a bottle.

 

Yeah, I agree that this will go through. InBev might have to raise their bid a bit, but it'll go through nonetheless. There would be a shareholder mutiny if they flat out refused the offer.

 

It is crappy beer, but I'm more concerned about the fate of the AB parks. I think the best thing that could happen would be for the management team of the parks to find a private equity firm to buy them out and retain the current management. I also think they'd be best off somehow retaining the AB affiliation. It is crappy beer, but I can't imagine the parks not being affiliated with alcohol in some way.

 

Oh, and wine > beer.

[raptorcrew2002]

^*cough. Yahoo.

 

I agree AB beer does suck.

I really doubt they will accept the first offer. Now the big questions which has yet to fully appear are the major holders, and those holders views on this offer. I think this is such a large company with lots of shareholders one way or another, this could get nasty.

 

To bad Yuengling couldn’t go after a hostile take over.

 

The parks are a big concern, not to mention all the programs AB does fund into. As I stated earlier the big picture.

 

Like the beer or hate it you have to admit AB does a lot of environmental, wildlife, education, etc. Beer wise I could careless but if everything else is lost then that would be truly sad and an actual loss.

 

As for the Parks going private equity.. Man that’s a 50/50 shot. Such overhead you would have to have a very strong group too make it work and many of those groups would penny pinch them to death or be scared to invest into markets with possible continual downturn.

 

The way I figure it, Inbev could, and just might be like GE and find out; hey we can actually make money from this! But most likely the first reaction would be what could we sell these for. Time will tell.

[figment1986]

I remember hearing somewhere that if Busch is bought, then the parks would be spun off into their own company. Which wont be too hard, considering the division is moving their headquarters over to Orlando out of st. Louis. Almost like A.B. had an idea someone might want the beer and not the parks soon.

[MisterP]

Living my whole life in STL and actually working for AB for a time, this deal seems surreal. The late August Busch II is rolling in his grave. And I read somewhere too that they weren't going to retain the parks.

 

And as far as the ever-popular "American beer sucks" mantra that many like to claim, here's my take. The micro-brews are great, they make very tasty beer. There are many imports that are tastier. But for regular Americans who drink a LOT of beer, they can get very expensive. So makers like AB and Miller make an affordable product that is lighter, and thus easier to drink more of. This stems partially from the Prohibition era and the fact that beer completed directly with American-made wine, whiskey, bourbon, rum, and gin. Its alcohol - and thus designed to get people intoxicated (whether the beer companies want to admit it or not).

 

Personally, the only AB product I drink is Bud regular. I can't drink 95% of light beers. I need some level of taste. I often stock up on local micros, or Blue Moon, Fat Tire, Sam Adams, etc., but there is always Bud or Miller Hi Life in my fridge at all times. I can't afford to always be buying a case of the "good" stuff, but a 30 pack of Bud is relatively affordable, tasty (IMO), and I can get drunk 3 or 4 times from it.

 

Its beer folks, its for getting drunk. Let's not act like its Dom Perignon.

[raptorcrew2002]

I remember hearing somewhere that if Busch is bought, then the parks would be spun off into their own company. Which wont be too hard, considering the division is moving their headquarters over to Orlando out of st. Louis. Almost like A.B. had an idea someone might want the beer and not the parks soon.

 

Problem with the spin off. Technically. If AB Spun off a division, it would have to be 100% separated with no affiliated connection directly to main parent company.

 

Basically you would need too setup a fresh new company #B. Sell or write off the transaction to #B while the second company would now claim that as sole ownership and if choosing to go public would trade under a separate symbol for the new company. This would create more of a partnership relationship which would not be affected in such a case.

 

Sounds easy, but this is a huge deal. Imagine a whole new company, accounting and all. It would report to itself and it’s board or CEO.

 

This would need to take place before acceptance of offer, otherwise be negotiated into the purchase of the company upon acceptance of Inbev’s offer. Now if AB was smart this choice has options of making Inbev sign into a decade contract of sponsorship of the new separate run company.

 

Some companies create a division which separates the revenue and tracking but still maintain them as a single ownership on paper and legally are one in the same. Example would be GE, with multi division and one parent. If GE was bought, it all goes with the parent. GE sub levels are more of a DBA (Doing business as) in sense.

 

Where as Apple had Pixar as a separate company before Disney. Apple revenue could not directly go into Pixar in sense and vise versa. Pixar equipment was bought from Apple, not supplied and the only relationship was Jobs.

[Loopy]

^^ Agreed.

 

My favorite beer right now is Beamish Irish stout. I took a liking to Guiness and found this much tastier. I drink it every once in a while, however a four pack is 8 bucks plus tax (ouch).

 

On top of that, every once in a while, I'm down for a plain ol domestic, such as MGD.

 

Only thing worse than crappy beer, is beer snobs who snub their nose at it.

[bgeguy]

I think this would be a huge mistake. Take an American icon, and all of a sudden it's now just an asset of a foreign company, and you'll see some angry shareholders as well as some angry Americans.

[mcjaco]

Its beer folks, its for getting drunk. Let's not act like its Dom Perignon.

 

Ah, but if you enjoy everything a good beer can offer, it's really much more than for just getting drunk. I can't tell you the last time I was drunk (probably October), but I drink every night. Trust me, I'm not knocking AB, I actually quite fond of the Wild Blue, and they at least let some of the brands try new things. I just don't care for mass produced American Lagers. I cut my teeth on them in college, and I just can't go back. Sam Adams is the only mass produced stuff you'll find in my fridge, and trust me, I've always got it in there. It's no more expensive than AB or Miller, and I find it to be of a much higher quality.

 

Only thing worse than crappy beer, is beer snobs who snub their nose at it.

 

When AB stops promoting their beer as the best American Lager full of taste, I'll stop snubbing my nose at them.

 

OK, back to park talk!

[ginzo]

^*cough. Yahoo.

 

In case you haven't noticed, Yahoo's shareholders are suing the board for turning down that offer. And hostile takeover guru Carl Icahn is trying to takeover the board. Yahoo turning down that offer was a huge EPIC FAIL on their behalf. The same thing would happen to AB's management team if they wind up turning down a very generous offer. Maybe the current offer isn't big enough to warrant a shareholder revolt, but if InBev sweetens the pot a bit AB's board will have to either accept the bid or face the wrath of the shareholders. And it won't be pretty.

[bgeguy]

Pride over profit!

 

This would be an epic loss to this nation. Do you know how many Americans would lose jobs over this?

 

InBev has had a history of cost cutting, so they would probably cut a lot out from AB.

 

www.saveab.com

[raptorcrew2002]

 

In case you haven't noticed, Yahoo's shareholders are suing the board for turning down that offer. And hostile takeover guru Carl Icahn is trying to takeover the board. Yahoo turning down that offer was a huge EPIC FAIL on their behalf. The same thing would happen to AB's management team if they wind up turning down a very generous offer. Maybe the current offer isn't big enough to warrant a shareholder revolt, but if InBev sweetens the pot a bit AB's board will have to either accept the bid or face the wrath of the shareholders. And it won't be pretty.

 

Agreed, but...

 

If by noticed you mean the multi forms I have received from Yahoo trying to cover their bottoms. I’m one of the ticked off holders on the MS deal who strongly supported the take over. Jerry Yang is a fool anyways.

 

But the Yahoo item is important to how this might unfold. If AB wants to truly try keeping the company upon rejecting the offer (Granted InBev does not counter offer) The outcome of the Yahoo legal issues will be major in the way companies handle offers in the future. I’m sure AB is watching that one very closely and might even prolong this offer to feel for its outcome.

 

Either way as said I believe this will be nasty, and very surprised if this is an easy hand over.

 

Saying that Yahoo also is a company in shambles per say on the operations side where as AB has a better leg to stand on when it comes to fighting. Bud has lost major market share but they still have more room/markets/avenues. This one all comes down to the majority holders and their views.

[ginzo]

Jerry Yang is a fool anyways.

 

A very, very rich fool. His rejection of MSFT's offer, to me, initially seemed like he was just trying to bleed MSFT of every penny they'd be willing to throw at the deal, but later it became clear that this is just about his ego.

 

Sure, Yang is set for life financially, but if he sold out he wouldn't get to play big powerful tech CEO anymore. And there aren't too many of those jobs running around for him to choose from. Sure he could find a job, but would he get to play the big man anymore? Probably not, at least not at a company as prominent as Yahoo.

 

Had Yang got out when Yahoo was at its peak during the dotcom madness, he probably could have gotten any job he wanted. But he chose to ride Yahoo's downward slide to the bitter last.

 

Oh well, I still think MSFT's main goal in buying Yahoo was to annoy Google.

[ChrisFL]

InBev has previously stated that they have no intention of assuming operations of the 2 Busch theme parks.

 

Ahem, there's a lot more than 2 Busch parks...try 10

 

2 Busch Parks

3 Sea World Parks

3 Water Parks

Discovery Cove

Sesame Place

3 Parks being built in Dubai

[bgeguy]

^Make that 4 parks being built in Dubai. A Busch Gardens, a SeaWorld, an Aquatica, and a Discovery Cove.

[crazydaveh]

AB is now going after the other half of Groupo Modello, the brewer of Corona. AB holds 50% of them now, but if they acquire them outright, InBev's offer will be weak to shareholders then... Thus keeping the buyout from taking place... For the time being.

 

What InBev is trying to do is to buy all outstanding shares to become majority shareholders. With the offer of $65 per share, they're trying to lure smaller investors like myself to sell off. I admit, I have my price, but it's not $65. As stated before, I'm a fan of tasty beers, not AB beers, but admit, I drank my share of AB product in college... Let's just keep it here... Go Away InBev!