InBev and Anheuser combine to create world’s largest brewer

Posted by Daniel Palmer on 14th July 2008

InBev and Anheuser-Busch today announced an agreement to combine the two companies, forming the world’s largest global brewer. In order to seal the amicable deal, InBev had to increase their initial $65/share offer to $70 – valuing the US brewer at US$52 billion.

The industry-transforming transaction between the second and third largest brewers occurs five weeks after the initial proposal by InBev. The relationship between the two companies threatened to become fractured with suits and counter suits being filed by the two companies. The sweetening of the deal by InBev, however, has stopped the saga from lasting months due to court proceedings.

The combined company will be called Anheuser-Busch InBev, with the Board of Directors of both companies unanimously approving the transaction.

The combination of Anheuser-Busch and InBev will create the global leader in the beer industry and one of the world’s top five consumer products companies. On a pro-forma basis for 2007, the combined company would have generated global volumes of 460 million hectoliters, revenues of US$36.4 billion and EBITDA of $10.7 billion. Anheuser-Busch and InBev together now believe that this transaction is in the best interests of both companies’ shareholders, consumers, employees, wholesalers, business partners and the communities they serve.

The company will make St. Louis, Missouri the headquarters for the North American region and the global home of the flagship Budweiser brand. With Budweiser an iconic brand in America InBev needs to be careful with the way they complete the deal and manage the combined company. As such, having the headquarters in the US, maintaining an Anheuser presence on the Board and keeping all the US breweries open will go some way to appease American consumers.

InBev CEO Carlos Brito will be Chief Executive Officer of the combined company.

InBev, owner of the Stella Artois and Beck’s brands, is delighted to have clinched the deal that finally gets them to achieve their goal of becoming the world’s largest brewer. “We are very pleased to announce this historic transaction today, bringing together two great companies that share a rich history of brewing traditions,” InBev CEO Carlos Brito proclaimed. “Together, Anheuser-Busch and InBev will be able to accomplish much more than each can on its own. We have been successful business partners for quite some time, and this is the natural next step for us in an increasingly competitive global environment. This combination will create a stronger, more competitive global company with an unrivaled worldwide brand portfolio and distribution network, with great potential for growth all over the world.”

August Busch IV, Anheuser-Busch President and CEO, added that it was an exciting opportunity for the company and provided them with a chance to grow the Budweiser brand. “Today’s announcement brings new opportunities for Anheuser-Busch and its business, brands and employees,” he claimed. “This agreement provides additional and certain value for Anheuser-Busch shareholders, while enhancing global market access for Budweiser, one of America’s true iconic brands. We will leverage our collective strengths to create a truly diversified, global company to sustain long-term growth and profitability.”