InBev Is Working Out $46Bln Anheuser Bid

Reuters

BRUSSELS -- Belgian brewer InBev is working on a $46 billion bid for Anheuser-Busch, said a source familiar with the situation.

News of a possible deal, which would be the largest in alcoholic-drink history, sent Anheuser shares up as much as 10 percent on Friday, while shares of InBev closed down 2.9 percent at 48.88 euros.

The source said an offer was not certain.

The news was first reported by the Financial Times, in its Alpahville blog. The report cited sources as saying the approach was expected to be pitched at $65 a share but while extensive work was being carried out, InBev was not about to "push the button."

One analyst in New York said a deal could come within days.

"The fact of the matter is, if they want to move, they've got to move now," said Robbert Van Batenburg, head of research with Louis Capital Markets.

The FT report said a financing package of $50 billion had been provisionally arranged through JPMorgan and Santander and that the bid had been discussed at an InBev board meeting on April 28 and at a meeting Thursday.

The report also said InBev is considering a hostile bid if Anheuser management refused friendly talks.

Officials from InBev, Anheuser and JPMorgan all declined to comment.

A deal at $65 a share represents a 23.6 percent premium over Anheuser's closing stock price of $52.58 on Thursday, the day before the report. The stock closed up 7.7 percent at $56.61 on Friday.

Talk of a possible bid by InBev -- brewer of Stella Artois, Beck's and Brahma -- for the U.S. maker of Budweiser and Michelob heated up in the past week after surfacing several times before. A Brazilian newspaper reported preliminary merger discussions as far back as February 2007.

"Anheuser-Busch shares and options have been active throughout the week due to rumors of a takeover," said William Lefkowitz, options strategist at New York brokerage firm vFinance Investments.

Wachovia analyst Jonathan Feeney said in a research note that Anheuser's limited commentary on the subject suggested a strong desire to remain independent.

He also said a $65 per share bid valued Anheuser at about 13 times annual earnings before interest, taxes, depreciation and amortization for the domestic beer business.

Gerard Rijk, a beverage analyst at ING in Amsterdam, said he felt the deal was a question of when, rather than if. "The consolidation has to continue. There are strategic synergies in North America and China," he said.

InBev, formed from the 2004 merger of Belgium's Interbrew with Brazil's AmBev, has a fraction of the U.S. market but very mature businesses in Western Europe. It also has growth in Russia, Eastern Europe, Asia and Latin America, notably in the key market of Brazil.

Anheuser dominates the United States and also has an equity stake in China's Tsingtao. But it has struggled recently as U.S. consumers abandon domestic beer for wine, spirits, foreign beers or small-batch craft brews.