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InBev buyout of Anheuser-Busch could now come as early as this weekend

Friday, July 11, 2008 | 11:00 a.m. CDT; updated 12:16 p.m. CDT, Tuesday, July 22, 2008

ST. LOUIS — After weeks of public bickering, Anheuser-Busch Cos. Inc.’s board is likely to accept a sweetened buyout offer from the Belgian-based brewer InBev SA as early as this weekend, a published report said.

The New York Times and The Wall Street Journal both cite unnamed sources in reports Friday that the talks have become friendly.

The Journal reported that InBev has boosted its takeover offer for the St. Louis-based maker of Budweiser, Bud Light and other beers by $5 a share to $70. It said the Anheuser-Busch board is likely to accept the offer this weekend.

That would be a stunning turnaround from the often heated rhetoric between the two companies over the past several days.

Anheuser-Busch Vice President and Chief Financial Officer W. Randolph Baker would say only that the company “does not confirm, deny or speculate on rumors of potential investments, acquisitions, mergers, new business partnerships or other transactions.” InBev offered no immediate comment.

Anheuser-Busch shares rose $4.47, or 7.3 percent, to $65.68 in morning trading after rising to a 52-week high of $66.20 earlier.

Analyst Juli Niemann of Smith Moore & Co. investment brokers agrees the merger could be announced any day.

“It really is all about the money,” Niemann said. “We just had to get a little bit more on the table. Bottom line is the rest is just housekeeping — what’s going to be the name of the new company, that sort of thing. The layoffs will go ahead. Asset sales — you’ve got to pay for it.”

InBev announced a $46 billion takeover bid on June 11. The Anheuser-Busch board rejected it as too low. But InBev pushed ahead.

On Monday, InBev’s takeover effort escalated to a hostile bid when the maker of Stella Artois and Beck’s announced through a filing with the Securities and Exchange Commission it would attempt to remove all 13 members of the Anheuser-Busch board. Anheuser-Busch responded by saying InBev sought a “hand-picked board” to buy the company at a discount.

At the time, InBev said it took the action because Anheuser-Busch had refused to talk about its offer. Anheuser-Busch released a statement saying it “would be open to consider any proposal that would provide full and certain value to Anheuser-Busch shareholders.”

Carlos Brito, InBev’s chief executive, has said he strongly prefers to negotiate with Anheuser-Busch. He has previously noted that InBev’s $65 a share offer is well above the $50 per-share price of Anheuser-Busch stock before its value was inflated by market speculation about InBev’s offer.

Anheuser-Busch’s board has laid out its own plan for earnings growth that would cut costs and increase prices to boost the stock’s value over the next few years. Brito earlier cited “significant execution risks” with the plan, saying it failed to tackle the problems Anheuser-Busch will face as prices soar for transportation and key ingredients.

The deal has been widely opposed by Missouri politicians, worried it would create a near-monopoly in the U.S. beer market and hurt the state’s economy. Anheuser-Busch employs about 6,000 workers in St. Louis.

Many St. Louisans fear the loss of the iconic brewer that is heavily involved in charitable and civic endeavors. A Web site, SaveBudweiser.com, claims to have nearly 60,000 signatures from merger opponents. Hundreds turned out for a recent anti-merger rally downtown.

InBev has promised to keep open all 12 of Anheuser-Busch’s U.S. breweries, and to keep the company’s North American headquarters in St. Louis.

Niemann said Anheuser-Busch has itself to blame for becoming a takeover target, allowing the stock price to stagnate around the $50-per-share range for the past several years.

“The family has run it like a private fiefdom even though they had no control over (the stock),” Niemann said. “That’s why you saw the stock flatter than 2-year-old beer until the rumors started with InBev.”

The beer industry has been consolidating in recent years amid rising costs for transportation fuel and key ingredients.


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