NEW YORK -- About one year after losing its ranking as the largest brewer in the world in terms of market capitalization, Anheuser-Busch (A-B) is on the hunt to recover that title, according to analysts from Citigroup.In a lengthy report issued yesterday, Citigroup predicted A-B will make a play in the next two years to acquire or merge with InBev to regain the global leadership. [A-B CEO] August Busch IV is certainly ambitious. He has made numerous comments recently that he wants to rescue the company from its slow fall from grace and return it once again to the global leadership position it [image-nocss] used to retain, said Citigroup's Bonnie Herzog during a conference call yesterday addressing the report. Therefore, we believe August Busch is on a mission and wants to partner with another large brewer to create the largest brewing company in the world. A-B, St. Louis, lost its top ranking as the No. 1 brewer in terms of market capitalization late last summer. It now ranks second behind Belgium's InBev, with South Africa-based SABMiller in a close third position.If A-B were to purchase InBev, brewer of Beck's and Stella Artois, among many other brands, the combined company would be responsible for nearly double to volume of product sold by SABMiller.Citigroup also estimates the synergies of the two companies would save the new entity between $4 million and $10 million. A deal with Anheuser would give rise to significant cost savings, said Citigroup's Philip Morrisey. It would also give them a great degree of geographic stability with the U.S. exposure. He added that recent comments presented in the media suggest InBev feels a deal with Anheuser is inevitable at some stage.A-B's vice president and CFO Randolph Baker had little comment on the issue. When asked by CSP Daily News, he only said, It is our policy to not confirm, deny or speculate on rumors of potential investments, acquisitions, mergers, new business partnerships or other transactions.But Herzog said the company has to do something if it wants to retain its status as a leader in the industry. They have no other choice, quite frankly, in my view, she said. Certainly they can introduce products; they have. There are a lot of initiatives, which is a lot of our concern in terms of execution risk. But at the end of the day, it's a global beer industry. Why now? I would argue that the timing could be right because they do wantto regain the global leadership, she said. There could be an opportunity within the next couple of years. It's obviously very, very difficult to predict exactly when, but I do have a sense that [August Busch IV] is ready and open as long as the combination would give him a role in the future of the company. I don't think he would relinquish power, if you will. And that's key.Busch IV was appointed CEO this past December. To download a complete copy of the report in .pdf format, click the "Download Now" button below.
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