Belgium brewer InBev has launched a $46.3 billion bid to buy Budweiser brewer Anheuser-Busch as it seeks to create the world's largest brewer with the biggest ever takeover of an alcoholic drinks company.
InBev's shares rose around 4 per cent to €49 in early trade in Brussels today after the company, whose brands include Stella Artois and Beck's, said yesterday it was offering $65 per share for Anheuser, which dominates the
US beer market with a 48.5 per cent share.
The beer industry is undergoing a wave of consolidation, with Scottish & Newcastle agreeing to be broken up by Carlsberg and Heineken, and SABMiller and Molson Coors Brewing agreeing to merge their US operations.
InBev's offer represents a 24 per cent premium to Anheuser's share price on May 22nd - the day before reports of merger talks surfaced - and could be just an opening step in negotiations likely to drive the final deal price higher.
InBev chief executive Carlos Brito said today the business rationale for the offer was "very strong".
Tom Pirko, president of beverage industry advising firm Bevmark, said he thought Anheuser could negotiate a price as high as $68 or $70.
"I think the cut-off price is $75. I don't think InBev would go beyond that. I think they'd go for SABMiller first," he said.
Anheuser, the maker of Budweiser and Michelob, which counts Warren Buffett's Berkshire Hathaway as its second-largest shareholder with a 5 per cent stake, saw its shares jump more than 7 per cent to $62.73 after-hours yesterday.
InBev, formed by the 2004 merger of Belgium's Interbrew with Brazil's AmBev, said it would "like to engage in a dialogue with the goal of consummating a friendly combination".
St Louis-based Anheuser said its board of directors "will evaluate the proposal carefully and in the context of all relevant factors, including Anheuser-Busch's long-term strategic plan", and make a determination regarding the proposal "in due course".
The two brewers already have deals whereby Anheuser distributes InBev beers including Bass Pale Ale, Hoegaarden and Leffe in the United States and InBev distributes Anheuser beers in Canada.
For most of the last century and a half, since Adolphus Busch, a German immigrant, married Lilly Anheuser and went to work at her father's brewery, the US brewer has been led by members of the Busch family.
They are likely to mostly oppose a takeover, analysts have said, but one family member, an uncle of the chief executive, has said he is open to it.
The family's ownership of the brewer has dwindled to the point where it could not veto a takeover, but it does exert some influence over the 14-member board of directors.
If InBev buys Anheuser for $46 billion it will be the largest takeover deal this year, excluding spin-offs, and would be the third-largest foreign takeover of a US company ever.