“Time of the essence” for Anheuser response to InBev

Posted by James Ferre on 26th June 2008

InBev have reaffirmed their interest in Anheuser-Busch via a letter prodding a response from the American company.

The unsolicited takeover bid, which values Anheuser-Busch at US$46.3b, was made two weeks ago, but Anheuser-Busch has since remained coy about their possible response.

It has been reported that members of the Busch family are divided about the potential takeover, while the company’s second largest shareholder, billionaire investor Warren Buffett, had been in support of a takeover – according to reports. Mr Buffett has since claimed rumours of his support to be false and has yet to form an opinion as to whether or not Anheuser-Busch should accept the offer.

Consolidation in the beer industry has been a noticeable trend over the past decade, but the potential takeover of Anheuser-Busch by InBev would certainly shake the sector up. InBev, owner of the Beck’s, Stella Artois and Hoegaarden brands, has been seeking to create the world’s largest brewer and purchase of American giant Anheuser-Busch, owner of the famous Budweiser brand, would enable them to achieve this goal – eclipsing current market leader SABMiller.

The Board of Directors of Anheuser met last Friday to discuss the offer but no response was made to the proposal. “The board will continue to review and consider the proposal,” they added in a statement. There has been strong speculation that they will reject the offer, however, in preference to a restructuring plan. The Wall Street Journal has reported that people familiar with the matter believe that a decision will soon be announced claiming the offer is too low and a restructure would instead be embarked upon.

InBev wrote their third letter to Anheuser-Busch yesterday indicating they have the “strong support of a group of leading financial institutions with respect to providing all of the financing required for the combination of our two great companies”.

InBev told Anheuser that they are committed to achieving a “friendly combination” although they did add that “time is of the essence”, and many analysts believe that if the proposal is rejected by the Anheuser Board then a hostile takeover may be attempted by the Belgian brewer.

The US Government may also stand in the way of InBev with reports that many politicians and activists are opposing the deal due to fears it could cost jobs, not to mention the issue of allowing the iconic American company to fall into foreign hands. The owner of the Budweiser brand was, after all, named the number one beverage company in FORTUNE Magazine’s list of “America’s Most Admired Companies” earlier this year; eclipsing Coca-Cola and Pepsi for the honour.

Republican Governor of Missouri, Matt Blunt, released a statement outlining his concerns about the company, which started from humble beginnings in St. Louis, Missouri, being purchased by overseas interests. “I have said that while I am supportive of action to prevent the sale there is no immediate tool available at the state level to block it,” he advised. “I have directed the Department of Economic Development to explore every option and any opportunity we may have at the state level to help keep Anheuser-Busch where it belongs – in St. Louis, Missouri.”