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[Bud & Becks] InBev targets takeover of Anheuser-Busch

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.

neil.hume@ft.com

Article Series - Bud & Becks

  1. InBev targets takeover of Anheuser-Busch
  2. The InBev strategy
  3. Finding $50bn in funds
  4. Golden beer barrels - the (potential) Anheuser exit packages
  5. InBev's plans for Anheuser's theme parks
  6. A white knight for Anheuser?
  7. Project Barium - InBev's negotiations with SABMiller
  8. Dear August, an unsolicited, non-binding proposal
  9. What price a bear hug?
  10. That touchy, feely, creepy beer bid
  11. Beer brawl - InBev signal hostile intentions for Anheuser-Busch
  12. What now for the prodigal uncle?

This entry was posted by Neil Hume on Friday, May 23rd, 2008 at 14:29 and is filed under M&A. Tagged with , , , , , . You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.

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Comments

  1. May 28   15:32 Posted by Mound City Money » Blog Archive » How about a beer merger without A-B? [report]

    […] FT Alphaville, the blog that broke the story of a possible Inbev offer for Anheuser-Busch, now says that things are pretty far along for Inbev’s Plan B: a merger with SABMiller instead. […]

  2. May 26   14:55 Posted by Global Beer Titan InBev to Make $46 Billion Offer for No. 1 U.S | Contrarian Profits [report]

    […] Analysts are already expecting opposition from Anheuser’s fiercely independent President and Chief Executive Officer August Busch IV. But if Busch refuses to commence friendly talks, InBev would then be prepared to go straight to key shareholders with its $65 per share bid, The Financial Times’ Alphaville blog reported, citing unnamed sources. […]

  3. May 26   14:10 Posted by Global Beer Titan InBev to Make $46 Billion Offer for No. 1 U.S. Brewer, Anheuser-Busch [report]

    […] Analysts are already expecting opposition from Anheuser’s fiercely independent President and Chief Executive Officer August Busch IV. But if Busch refuses to commence friendly talks, InBev would then be prepared to go straight to key shareholders with its $65 per share bid, The Financial Times’ Alphaville blog reported, citing unnamed sources. […]

  4. May 24   4:02 Posted by InBev wants to be Anheuser-Busch’s best BUD | BigInfo.org [report]

    […] Good news for shareholders of Anheuser-Busch Cos. (NYSE: BUD). Shares of the world’s second-largest brewer are surging over 8% to $56.81 on a report that it may receive a bid worth $46 billion from InBev NV. […]

  5. May 24   3:11 Posted by InBev wants to be Anheuser-Busch’s ideal BUD | money news blog [report]

    […] Good news for shareholders of Anheuser-Busch Cos. (NYSE: BUD). Shares of the world’s second-largest brewer are surging over 8% to $56.81 on a report that it might receive a bid worth $46 billion from InBev NV. […]

  6. May 23   23:34 Posted by Mound City Money » Blog Archive » The scary number: $1.4 billion in A-B cost cuts [report]

    […] In St. Louis, though, another number in the original FT Alphaville report should give folks pause: InBev reportedly thinks it can cut costs at A-B by $1.4 billion a year. […]

  7. May 23   23:04 Posted by Deal Journal - WSJ.com : Winners and Losers From the Week That Was [report]

    […] Jamie Dimon: If the FT Alphaville’s report is correct and the J.P. Morgan Chase chief is negotiating directly with InBev about financing its bid for Anheuser-Busch, it would mark the latest example of how Dimon has become the go to man for deal making on Wall Street. Remember it was Dimon, who encouraged Mars to seek financing to acquire Wrigley last month. […]

  8. May 23   22:34 Posted by Research Recap » Blog Archive » Fitch Skeptical on Prospect of InBev-Anheuser Merger [report]

    […] Fitch Ratings is skeptical about major beer company mergers in a timely special report on the global beer industry. FT Alphaville today reports that Belgium’s InBev (Brussels: INTB) is preparing a bid for Anheuser Busch (NYSE: BUD). […]

  9. May 23   21:14 Posted by K Delko [report]

    Inbev needs BUD and will pay up to the high 60s. The question is how can Bush get away with not accepting a high 60s deal? I can’t think of a strategy for him to explain to the board and to shareholders. The Inbev management team has built the largest beer company in the world (Inbev and Ambev) while BUD stock has been going no where.

  10. May 23   20:16 Posted by AMERICAN NONSENSE » One Beer For The Whole World? : The Anheuser-Busch Deal [report]

    […] A Financial Times’ Alphaville post today revealed that InBev is launching a $46 billion plan to takeover Anheuser-Busch. […]

  11. May 23   20:03 Posted by Deal Journal - WSJ.com : Afternoon Reading: Is This Bud for InBev? [report]

    […] Today, though, such speculation got a big boost. The Financial Time’s FT Alphaville reports that InBev is planning to make an offer of $65 per share for Anheuser-Busch. That values the U.S. brewing giant at $46 billion. […]

  12. May 23   18:27 Posted by Deal Journal - WSJ.com : Anheuser-Busch: Is Resistance Futile? [report]

    […] But is it the same in the world of mergers? Anheuser-Busch could soon face an unwelcome bear hug from rival InBev, which is plotting a $100 billion combination that will include $50 billion in financing, according to the FT’s Alphaville blog. Deal Journal readers already know that Anheuser-Busch doesn’t want to do a deal and that the market doesn’t care what the company says. But does Anheuser-Busch have a chance if it wants this Bud to stand alone? […]

  13. May 23   18:09 Posted by Money Clerks » InBev wants to be Anheuser-Busch’s best BUD [report]

    […] Good news for shareholders of Anheuser-Busch Cos. (NYSE: BUD). Shares of the world’s second-largest brewer are surging over 8% to $56.81 on a report that it may receive a bid worth $46 billion from InBev NV. […]

  14. May 23   17:44 Posted by InBev Takeover of Anheuser-Busch | Drink Recipes, Mixed Drinks, Shooters, Shots, Cocktails, Drinking Games and More [report]

    […] Full Report Here. […]

  15. May 23   17:43 Posted by Ed [report]

    @ J Allan - one thing I could never reconcile studying Economics and learning about the various governmental mechanisms to control monopolies was that surely the ultimate goal of any company is to become a monopoly - they are living their destiny not only as a profit centre but as the *most* successful profit centre in the market.

    If we accept that markets are ‘almost’ perfect - i.e. a level playing field in the short run but over the long run ‘the good(efficient) will out” - a monopoly surely represents the most successful form a company can take.

    Of course, this assumes success = efficiency = success, which is clearly simplistic to us decent humans, but among fellow companies operating to the rules of economics (assumption: whose sole purpose is profit), they’re the rock stars!

    One for the weekend.

  16. May 23   15:58 Posted by Talk of the Day » Blog Archive » Is A-B in play? Could the brewer really be taken over? [report]

    […] We’ve got a report online now that says this: “The FT Alphaville blog is reporting that InBev is working on a $46bn takeover for St. Louis-based Anheuser-Busch, the maker of Budweiser. The blog did not disclose its sources, and noted that representatives from InBev and Anheuser-Busch did not comment.” […]

  17. May 23   15:52 Posted by MarketBeat : 99 Beer Call Options On the Wall... [report]

    […] Activity in these options started ticking up in late April on chatter about a deal. FT.com’s Alphaville blog reported today that InBev is considering a deal, potentially at $65 a share. BUD shares closed at $52.58 on Thursday and reached a high of $57.97 in Friday trading. […]

  18. May 23   15:17 Posted by J Allan [report]

    Do you think this what Adam Smith had in mind as “free markets”?

    A handful of global behemoths dominating mining, steel refining, oil, pharmaceuticals, brewing…

This post is closed to further comments.