Anheuser Busch no small beer for InBev

The world's largest brewer has finally made a $46bn bid for Anheuser Busch, maker of Budweiser.

Last Updated: 06 Nov 2012

Belgian based InBev, which already owns the Stella Artois and Becks brands, is offering $65 a share for the maker of Budweiser, America’s most famous beer. That’s an 11% premium on the closing price yesterday. But rumours of this bid have been rumbling around for months, and have probably been responsible for taking A-B’s share price up from around the $45 mark where it was languishing in March.

The logic of the deal is clear: InBev is a global beer monster with major markets in the UK, Europe and South America. A-B by contrast is strong in China and especially the USA, where it has a whopping 48% of the market. A marriage made in the mash tun, you might think.

But the fiercely independent Anheuser board, lead by CEO August Busch IV, no less, has been firmly against the idea for years, and while the Busch family doesn’t have voting control it remains very influential in the running of the company. Predictably for the maker of the self-styled ‘king of beers’ it has given this bid a pretty flat reaction, stating merely that it will review ‘the merits of the proposal consistent with its fiduciary duties.’ So no popping of celebratory crown corks in the boardroom, then.

The news is going doing even less well with A-B's 35,000 strong workforce; InBev's reputation for cost-cutting precedes it, and fears of jobs losses and plant closures are growing. InBev boss Carlos Brito has already moved to calm such dangerous talk, promising that the firm's HQ will remain in St Louis and that headcount will not suffer.

If the deal does go through it will give InBev access to the world’s most valuable beer market, and would also bring sighs of relief to the financial markets. If InBev – and its backers JP Morgan and Santander - can raise this kind of dosh for a takeover bid, the reasoning goes, then the worst of the credit crunch may at last be behind us.

But the real ale fans here at MT are not so sure. $46bn for the maker of a beer which proudly lists ‘rice’ before ‘barley malt’ on the label sounds like a clear case of irrational exuberance to us.

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