Business

Belgian brewer raises its bid for Anheuser-Busch, insider says

Anheuser-Busch, the biggest U.S. beer maker, began talks with InBev after the Belgian brewer sweetened its takeover offer by 7.7 percent to $70 a share, ending the 156-year-old company's monthlong fight to remain independent, a person with knowledge of the situation said.

Discussions over the $49.9 billion bid may still fall through, said the person, who asked not to be identified because the negotiations aren't public.

Both companies rose in trading Friday on optimism that Leuven, Belgium-based InBev NV would gain control of the 132-year-old Budweiser brand and become the world's largest brewer by sales volume. Anheuser-Busch Cos., which has gained 26 percent since reports of InBev's planned bid, had spurned the $65-a-share proposal as inadequate.

“Five dollars more goes a long way in making two enemies reach a middle ground,” said Jack Russo, an analyst with Edward Jones & Co. “I thought it would drag on for a while.”

The talks were reported earlier by the New York Times, which indicated billionaire investor Warren Buffett may support a deal. Buffett, whose Berkshire Hathaway is Anheuser-Busch's second-largest shareholder, has refused to speak with reporters while attending the Allen & Co. conference in Sun Valley, Idaho, this week.

W. Randolph Baker, Anheuser-Busch's chief financial officer, said in an e-mail that the company's policy is not to comment on “rumors.” Nina Devlin, an InBev spokeswoman who works at Brunswick Group LLP, declined to comment.

Anheuser-Busch gained $5.29, or 8.6 percent, to $66.50 in New York Stock Exchange composite trading, the biggest gain since 1987. A bid of $70 a share is 27 percent more than its previous high of $54.97, reached in October 2002.

At $70 a share, InBev is offering about 11 times Anheuser's 2009 projected earnings before interest, taxes depreciation and amortization (EBITDA). SABMiller Plc, the world's third-largest brewer, paid about 14 times EBITDA for Royal Grolsch, Petercam SA's Kris Kippers said.

InBev, the biggest beer company by sales, would surpass SABMiller as the largest by volume if it bought Anheuser.

The Belgian company, which makes Stella Artois lager and Bass ale, wrote to Anheuser-Busch June 25 and said it paid lenders $50 million to get at least $40 billion in financing commitments for its offer. The Belgian brewer has introduced a $45 billion syndicated loan, Reuters reported Friday, citing unnamed banking sources.

InBev asked a federal judge earlier this week to decide whether all 13 of Anheuser's directors can be fired at once without cause. The Belgian company has said it will seek such a vote by shareholders of the U.S. beer maker.

The two brewers brought their fight into court last month, and the new talks might help avert a prolonged legal fight.

The Belgian company is seeking control of half of the U.S. beer market and aims to grow in China, where Anheuser-Busch owns 27 percent of Tsingtao Brewery, the country's second-largest brewer.

“InBev indicated from the start they prefer a friendly combination,” said Wim Hoste, an analyst at KBC Securities in Brussels. “The chances they will eventually acquire Anheuser are quite high.”

A takeover of Anheuser-Busch would be the second-biggest purchase of a consumer company.

The U.S. brewer spurned the original $46.3 billion proposal from InBev on June 26 as “financially inadequate,” and kept the door open for a higher offer from InBev or another suitor. That rejection came three hours after InBev made its bid hostile and announced plans to fire the St. Louis-based brewer's directors.

Busch family members, who don't own enough stock to block a bid, were split over the initial offer. Andrew Busch, an uncle of Anheuser Chief Executive Officer August Busch IV, said on June 21 that he wanted the brewer to stay based in St. Louis and continue as a “strong company.” Another uncle, Adolphus Busch IV, urged Anheuser's board to accept the InBev proposal.

InBev may sell Anheuser-Busch's theme parks, which include Sea World, and its packaging unit, to help fund a deal, analysts have said.

Anheuser-Busch, the biggest U.S. beer maker, began talks with InBev after the Belgian brewer sweetened its takeover offer by 7.7 percent to $70 a share, ending the 156-year-old company's monthlong fight to remain independent, a person with knowledge of the situation said.

Discussions over the $49.9 billion bid may still fall through, said the person, who asked not to be identified because the negotiations aren't public.

Both companies rose in trading Friday on optimism that Leuven, Belgium-based InBev NV would gain control of the 132-year-old Budweiser brand and become the world's largest brewer by sales volume. Anheuser-Busch Cos., which has gained 26 percent since reports of InBev's planned bid, had spurned the $65-a-share proposal as inadequate.

“Five dollars more goes a long way in making two enemies reach a middle ground,” said Jack Russo, an analyst with Edward Jones & Co. “I thought it would drag on for a while.”

The talks were reported earlier by the New York Times, which indicated billionaire investor Warren Buffett may support a deal. Buffett, whose Berkshire Hathaway is Anheuser-Busch's second-largest shareholder, has refused to speak with reporters while attending the Allen & Co. conference in Sun Valley, Idaho, this week.

W. Randolph Baker, Anheuser-Busch's chief financial officer, said in an e-mail that the company's policy is not to comment on “rumors.” Nina Devlin, an InBev spokeswoman who works at Brunswick Group LLP, declined to comment.

Anheuser-Busch gained $5.29, or 8.6 percent, to $66.50 in New York Stock Exchange composite trading, the biggest gain since 1987. A bid of $70 a share is 27 percent more than its previous high of $54.97, reached in October 2002.

At $70 a share, InBev is offering about 11 times Anheuser's 2009 projected earnings before interest, taxes depreciation and amortization (EBITDA). SABMiller Plc, the world's third-largest brewer, paid about 14 times EBITDA for Royal Grolsch, Petercam SA's Kris Kippers said.

InBev, the biggest beer company by sales, would surpass SABMiller as the largest by volume if it bought Anheuser.

The Belgian company, which makes Stella Artois lager and Bass ale, wrote to Anheuser-Busch June 25 and said it paid lenders $50 million to get at least $40 billion in financing commitments for its offer. The Belgian brewer has introduced a $45 billion syndicated loan, Reuters reported Friday, citing unnamed banking sources.

InBev asked a federal judge earlier this week to decide whether all 13 of Anheuser's directors can be fired at once without cause. The Belgian company has said it will seek such a vote by shareholders of the U.S. beer maker.

The two brewers brought their fight into court last month, and the new talks might help avert a prolonged legal fight.

The Belgian company is seeking control of half of the U.S. beer market and aims to grow in China, where Anheuser-Busch owns 27 percent of Tsingtao Brewery, the country's second-largest brewer.

“InBev indicated from the start they prefer a friendly combination,” said Wim Hoste, an analyst at KBC Securities in Brussels. “The chances they will eventually acquire Anheuser are quite high.”

A takeover of Anheuser-Busch would be the second-biggest purchase of a consumer company.

The U.S. brewer spurned the original $46.3 billion proposal from InBev on June 26 as “financially inadequate,” and kept the door open for a higher offer from InBev or another suitor. That rejection came three hours after InBev made its bid hostile and announced plans to fire the St. Louis-based brewer's directors.

Busch family members, who don't own enough stock to block a bid, were split over the initial offer. Andrew Busch, an uncle of Anheuser Chief Executive Officer August Busch IV, said on June 21 that he wanted the brewer to stay based in St. Louis and continue as a “strong company.” Another uncle, Adolphus Busch IV, urged Anheuser's board to accept the InBev proposal.

InBev may sell Anheuser-Busch's theme parks, which include Sea World, and its packaging unit, to help fund a deal, analysts have said.

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