InBev, the brewing giant created through the merger of Interbrew and AmBev, is working on a $46bn takeover approach for Anheuser-Busch, the iconic American brewer of Budweiser, FT Alphaville has learned.
The deal is being billed as a “transformational” move by those executives and bankers involved, and is likely to herald the long-awaited end-game in global drinks industry consolidation. InBev’s aim is to create the fifth largest consumer products group in the world.
A direct approach to Anheuser chief executive August Busch IV is being planned, although expecting a cool reception, the InBev team are preparing to send a follow up letter to the American group’s entire board, mapping out terms that are expected to be pitched at $65 a share. If Anheuser refuse to commence friendly talks, InBev is considering a public appeal direct to the target’s shareholders.
On Friday, sources indicated that while extensive work had been carried out on the transaction, InBev was “not about to push the button.”
However, putting the two companies together would create a business capitalised at close to $100bn and would constitute the most ambitious piece of corporate consolidation since the onset of the credit crisis last summer. Anheuser and InBev together would be almost equally balanced between developed and emerging market operations across the globe, pumping out around 350m hectolitres of beer and other beverages annually. Annual revenues would be around $20bn, producing earnings of close to $6bn at the ebitda level.
A financing package – which stretches to $50bn in total – has already been provisionally arranged through JPMorgan and Santander. It is envisaged that a takeover would be followed up with a rights issue in about 12 months time, when the newly enlarged group would raise somewhere between $10bn and $17bn to pay down a bridge financing facility.
The matter was discussed at length at an InBev board meeting on April 28 and then again at a fresh meeting held this Thursday.
Antonio Weiss at Lazards in Paris is the prime corporate financier advising the InBev board on the matter. On the financing side, direct negotiations are believed to have been held between Felipe Dutra, InBev’s financial officer, and Jamie Dimon at JPMorgan, while former IMF head Rodrigo de Rato has led discussions on behalf of InBev with Emilio Botin at Santander.
Sullivan & Cromwell are providing legal advice, with the firm’s top M&A partner, James Morphy, working on the deal from New York.
Sources with a close knowledge of the putative deal said an approach to Anheuser by InBev was first made informally last October, but August Busch insisted he would protect Anheuser’s independence and wanted time to show his mettle at a job to which he had only recently been promoted.
But InBev’s advisers believe Mr Busch would now succumb to shareholder pressure to open merger talks and are banking on the fact that Anheuser’s board would feel duty bound to follow due process and formally consider a bid if they received a private offer pitched at a substantial premium.
Anheuser has been codenamed Aluminum for the transaction, while InBev is referred to as Nest.
The parties involved would not comment publicly or did not return calls.