InBev May Be Drafting Merger With A-B

Belgian beer giant InBev is working up what may be a $44.6 billion offer for Anheuser-Busch, according to The New York Times.

The world’s largest brewer by sales volume and the maker of Stella Artois, InBev already has some ties to Anheuser-Busch, as it distributes Budweiser in Canada while A-B imports InBev beers like Stella Artois and Bass. InBev sold Rolling Rock to A-B in 2006 for $82 million, The New York Times reported.

Anheuser-Busch holds more than 50% of the domestic market in the U.S., and a merger with InBev – a distant reality no matter what the time frame – would ink the largest deal ever in the beverages industry.

A union between the two “would plug holes in the two companies’ market presences, mixing Anheuser-Busch’s dominant domestic position with InBev’s strength in international markets,” the newspaper said.

News of the potential merger was first reported in UK-based The Financial Times.

It’s unclear whether Anheuser-Busch’s management would agree to cede control. The company’s chief executive, August A. Busch IV, said recently he and his management had been preparing a defense against possible takeover bids.

Members of the Anheuser or Busch families have controlled the brewer for 148 years, except for the period from 2002 to 2006 when Patrick T. Stokes was chief executive. Mr. Busch, 43, is the fifth generation of the Busch family to run the company.

Many of Anheuser-Busch’s directors have served on the company’s board for at least a decade, potentially signaling that they will back the Busch family, according to a research note written Friday by Judy E. Hong, a Goldman Sachs analyst.

Ms. Hong upgraded Anheuser-Busch’s stock to neutral from sell, writing that the deal speculation “is likely to support the stock near term,” The New York Times reported.

But Anheuser-Busch also seems vulnerable to a hostile takeover. The brewer’s board is no longer staggered, meaning that all its directors are up for re-election in any given year. Moreover, the founding Busch family does not control the company through super-voting shares, as is the case with some other family businesses that are publicly held.

Berkshire Hathaway, the holding company run by the billionaire investor Warren E. Buffett, is one of Anheuser-Busch’s largest shareholders, with a nearly 5% stake, according to recent regulatory filings.

Speculation that InBev might make a bid for Anheuser-Busch has percolated for more than a year. In February 2007, a Brazilian newspaper (without naming sources) said the two companies were in merger talks, The New York Times reported.

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