Sunday, 13 July 2008

The Battle for Bud

Is it End Game for Budweiser
as InBev up its shares offer?

It seems the battle for control of giant American brewer Anheuser-Busch could be over as InBev, the Belgian-Brazilian giant, has increased its bid for the Budweiser brewer to $50 billion. After weeks of acrimony and bad-tempered exchanges, both sides have now agreed to hold friendly talks as InBev raised its bid by $5 a share to $70.
Before the increased offer was made, relations between them had reached boiling point. InBev said it would remove the entire A-B board and replace it with an independent board. A-B countered by claiming that as InBev trades with Cuba, where it not only sells beer but runs the Coca-Cola franchise, it was not fit to take over an "all-American" company that maintains the Cuba blockade.
The sheer size of A-B's operations -- it is market leader in the U.S., where Budweiser alone accounts for 50% of beer sales, and is the world's biggest beer brand -- has brought out the heavy guns of the banking world. InBev, best known as owner of Stella Artois, is backed by Deutsche Bank, BNP Parisbas, Lazard and JP Morgan, while Goldman Sachs, Merrill Lynch and Citigroup have stepped up to the plate for A-B. If InBev is successful in its bid for A-B it will take on astonishing amounts of debt but will hope to pay it off as a result of increased beer sales. InBev also has a tough reputation for closing breweries and centralising production.
Anheuser-Busch has put up a vigorous fight for survival, led by chief executive August Busch. But the Busch family controls only a small minority of shares and independent shareholders have been tempted by InBev's latest offer. But the fight may go on: citizens of St Louis, Missouri, where two German immigrants called Anheuser and Busch opened their first brewery in the mid-19th century, have reacted angrily to the possible sale of the company and have staged protests and internet petitions.


Blogger Zak Avery said...

It's a perilous time for InBev to be doing this in the US. The soundness of their investment relies on a sure economy, and the belief that their takeover won't turn a glass of Bud into a poisoned chalice for Bud's target demographic, neither of which are sure bets.

Americans are largely a patriotic bunch, and politically, I think that the unions are still very strong in the US - they never had the Thatcher character that broke the unions here in the mid-80s - so I look forward to following the fall-out from this deal.

14 July 2008 at 23:04  

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