Anheuser-Busch a Buyout Target?

Acquisition rumor comes on heels of management changes

ST. LOUIS -- Shares of Anheuser-Busch Cos. Inc. rose Tuesday on a report that a well-known hedge fund may be interested in acquiring the beer brewer. According to the Associated Press, The Times of London reported that ESL Investments, the Greenwich, Conn.-based hedge fund run by billionaire investor Edward Lampert, may be about to launch a $56-per-share bid, valuing the company at about $44 billion.

Lampert and ESL are best known for orchestrating Kmart's acquisition of Sears last year, which created Sears Holding Corp. Lampert is chairman of the Hoffman [image-nocss] Estates, Ill.-based retailer.

Citigroup analyst Bonnie Herzog, however, said in a research note that "we assign a very low probability on the likelihood that this transaction takes place. The chances Mr. Lampert truly is interested in pursuing an LBO of the company are low."

She added, "Although we appreciate that Mr. Lampert does have some power and influence, we don't expect an LBO of Anheuser-Busch by Mr. Lampert given it doesn't seem to fit with his past deals, which tend to be more of a retail play; it would be a very large transaction given [A-B's] market cap is $36 billion; androughly 3.7% of [A-B]'s outstanding stock is held by insiders."

In late September, the A-B board elected August A. Busch IV as a director and named him president and CEO of the corporation effective Dec. 1, 2006.

Busch IV succeeds Patrick Stokes, 64, who has held the corporate president and CEO positions since July 2002. Stokes has been named chairman of the board, effective Dec. 1, 2006, succeeding August A. Busch III. Stokes and Busch III will both retire from their executive functions at the company on Nov. 30, 2006. Busch III will continue to serve on A-B's board.

Busch IV, 42, has led the U.S. beer company since July 2002. He has been with the company for 21 years, beginning as an apprentice brewer in 1985 where he was a member of Brewers & Maltsters Local 6. Busch IV has held a variety of positions in management, brewing, operations and marketing. He was named group vice president of marketing and wholesale operations in 2000, vice president of marketing in 1996 and vice president of brand management in 1994.

Busch IV is the fifth generation of Busch family members to lead the company. His great-great grandfather was Adolphus Busch, who co-founded the company. Adolphus Busch married Lilly, the daughter of Eberhard Anheuser, who had purchased the brewery in 1860.

Busch III also announced that John E. Jacob will retire as executive vice president of global communications. Jacob, 71, will remain on the A-B board Also, Joseph P. Sellinger, 60, and James F. Hoffmeister, 62, have announced they will retire from the company, effective November 30. Sellinger has been with the company for 35 years, most recently leading its packaging subsidiary. Hoffmeister has spent 39 years with Anheuser-Busch, most recently leading the procurement, agricultural and transportation operations.

Succeeding Sellinger as CEO and president of the packaging subsidiary will be Michael S. Harding, 55, who is currently vice president of U.S. brewery operations. The packaging subsidiary will move under Douglas J. Muhleman, group vice president of brewing operations and technology for the company's U.S. and international breweries. Muhleman also will gain responsibility for the logistics functions of the company, currently managed under Hoffmeister.

Robert C. Lachky, who has served as executive vice president of global industry development since August 2005, has also been named to the Anheuser- Busch Cos. strategy committee.

Before his current position, Bob served as vice president of brand management and director of global brand creative.

Gary R. Welker, vice president of distribution systems and services, who is responsible for logistics, will also be retiring. Promoted to succeed Welker is Timothy E. Armstrong, who will become vice president of transportation and logistics. Armstrong will report to Muhleman. Succeeding Harding as vice president of operations will be Peter J. Kraemer, reporting to Muhleman.

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