ST. LOUIS -- In a deal that would be the biggest in beverage-industry history, Belgian brewer InBev is said to be preparing a $44.6 billion offer for Anheuser-Busch, the American brewer of Budweiser, reported The New York Times. InBev is the world's largest brewer by sales volume and the maker of Stella Artois. Anheuser-Busch holds more than 50% of the domestic market.
But any possible InBev bid, sources cited by the newspaper said, was still far off. The news was first reported by The Financial Times' Alphaville blog, which said that InBev was prepared to pay $65 a share.
Shares [image-nocss] in A-B rose more than 7.6% on Friday, to close at $56.61, its highest closing price in more than 10 years, on the news, said the report.
Domestic beer brewers have struggled in recent years as consumers have drifted away from mass-market brands in favor of wine, spirits and craft beers and imports, said the report. Shares in St. Louis-based A-B have risen only 7.9%, it said.
That has precipitated a recent deal-making wave in the beverage industry. In October, SABMiller and Molson Coors agreed to combine their operations in the United States and Puerto Rico, a move that many analysts said would create a stronger competitor to A-B.
The two companies already share some ties, the report said. InBev distributes Budweiser in Canada, and A-B imports InBev beers like Stella Artois and Bass. In 2006, InBev sold its Rolling Rock brand to A-B for $82 million. Also, a union would plug holes in the two companies' market presences, mixing A-B's dominant domestic position with InBev's strength in international markets, said the New York Times.
It is unclear, however, whether A-B's management would agree to cede control of the iconic company. The company's CEO, August A. Busch IV, said recently that he and his management had been preparing a defense against possible takeover bids.
In a research note cited by the newspaper, analysts from Credit Suisse wrote that A-B could counter a hostile bid by buying the 50% of Mexico's Grupo Modelo that it does not already own. The move would raise A-B's price tag, potentially deterring an unsolicited bidder, the analysts wrote.
Members of the Anheuser or Busch families have controlled the brewer for 148 years, except for the period from 2002 to 2006, when Patrick T. Stokes was CEO. Busch, 43, is the fifth generation of the Busch family to run the company. Many of A-B's directors have served on the company's board for at least a decade, potentially signaling that they will back the Busch family, according to a research note cited by the paper written by Judy E. Hong, a Goldman Sachs analyst.
But A-B also seems vulnerable to a hostile takeover, said the report. The brewer's board is no longer staggered, meaning that all its directors are up for re-election in any given year. Moreover, the founding Busch family does not control the company through supervoting shares, as is the case with some other family businesses that are publicly held.
Berkshire Hathaway, the holding company run by the billionaire investor Warren E. Buffett, is one of A-B's largest shareholders, with a nearly 5% stake, according to recent regulatory filings.
Speculation that InBev might make a bid for A-B has percolated for more than a year, said the New York Times. In February 2007, a Brazilian newspaper—without naming sources—said the two companies were in merger talks. After the SABMiller-Molson Coors deal in October, an analyst at Citigroup, Bonnie Herzog, estimated that there was a 70% chance of a deal uniting InBev and Anheuser-Busch by 2009. Speculation then resurfaced in February, this time in a Belgian business magazine.
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