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Originally published June 12, 2008 at 12:00 AM | Page modified June 12, 2008 at 8:06 AM

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Belgium's InBev makes $46B offer to Anheuser-Busch

Anheuser-Busch, the nation's biggest brewery, received a $46 billion buyout offer Wednesday from a Belgian brewer that might be too good...

The Associated Press

ST. LOUIS — Anheuser-Busch, the nation's biggest brewery, received a $46 billion buyout offer Wednesday from a Belgian brewer that might be too good to refuse.

The maker of Budweiser beer disclosed late Wednesday that InBev, whose brands include Beck's and Stella Artois, delivered an unsolicited all-cash bid of $65 a share.

Anheuser-Busch also owns about one-third of both Redhook Ale Brewery in Woodinville and Widmer Brothers Brewing in Portland, two craft brewers that hope to complete a merger later this year.

It's unclear whether senior Anheuser-Busch executives think the deal makes sense, but shareholders may be drawn to the offer that represents a sizable premium over the company's closing price of $58.35 Wednesday.

"Anheuser-Busch said that its board of directors will evaluate the proposal carefully and in the context of all relevant factors, including Anheuser-Busch's long-term strategic plan," the company said in a statement.

A spokeswoman said the company would not comment beyond the statement.

Speculation has been rife in past weeks that a takeover bid was coming. The beer industry has been consolidating in recent years amid rising ingredient costs and stale demand in the U.S.

Shares of the U.S. brewer surged almost 8 percent to $62.84 after hours, when the announcement was made. They had risen 2 percent in regular trading earlier in the day, when rumors of the deal were reported on CNBC.

Opposition to a potential takeover already has been fierce in Anheuser-Busch's hometown of St. Louis, and elsewhere in the U.S. The brewer employs 6,000 people in St. Louis, and many workers are worried InBev will cut jobs as the companies consolidate.

Web sites have sprung up opposing the deal on patriotic grounds, arguing that such an iconic U.S. firm shouldn't be handed over to foreign ownership.

Republican Gov. Matt Blunt said Wednesday he opposes the deal, and directed the Missouri Department of Economic Development to see if there was a way to stop it.

InBev was formed in 2004 when Belgium's Interbrew merged with South America's biggest brewer, AmBev. Since then, the company has cut jobs in several European countries even as its sales were boosted by strong demand in Latin American countries.

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Worries about job cuts at Anheuser-Busch could be justified. InBev has a reputation for squeezing costs out of the companies it acquires, said Benj Steinman, editor of the Beer Marketer's Insights trade publication. Because of its size — and control of nearly half the U.S. beer market — Anheuser-Busch could be a ripe target for cost-cutting.

"One theory is that their own cost reductions are winding down in Europe and Asia and around the world, and they need somewhere to sort of implement what they're best at," Steinman said.

Anheuser-Busch executives have made cost-cutting a goal over the last two years. Sales in the U.S. have been stagnant as consumers turn toward wine and cocktails, and the rising costs of ingredients have bitten into profit margins.

Last year, Anheuser-Busch turned a profit of $2.12 billion, up nearly 8 percent from $1.97 billion in 2006. But its core brands of Budweiser and Bud Light continued to lag as sales of craft beers and imports rose.

While the InBev deal looks sweet on paper, it's far from a sure thing.

Anheuser-Busch did not release details of how InBev planned to finance the deal and raising so much capital could be tough as banks tighten their standards during a global credit crunch.

And opposition is sure to be stiff in St. Louis. A new Web site called SaveAB.com offers visitors yard signs and bumper stickers to express their distaste for the purchase.

"Like baseball, apple pie and ice-cold beer (wrapped in a red, white and blue label), Anheuser-Busch is an American original," the site says.

Copyright © 2008 The Seattle Times Company

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