Anheuser-Busch bud, the biggest U.S. brewer and third worldwide by volume, said Wednesday that it received an unsolicited $46.3 billion takeover bid from Belgium-based InBev, No. 2 worldwide.
A-B announced after the U.S. markets' close that it had "received an unsolicited, non-binding proposal from InBev to acquire all of the outstanding shares of Anheuser-Busch for $65 per share in cash."
A-B's stock closed up 2% Wednesday at $58.35 before the announcement, but rose to more than $62 after-hours. The company would not comment further on the bid except to say the board would "evaluate the proposal carefully and in the context of all relevant factors, including Anheuser-Busch's long-term strategic plan" and make a determination "in due course."
Despite A-B's 148-year family heritage and CEO August Busch IV's recent statements that it's not for sale, the family holds just 4% of voting stock and can't block a takeover.
"If it turns out to be a hostile arrangement, it is a colossal deal," says Benj Steinman, editor of industry tracker Beer Marketer's Insights. "It would be the largest beer deal ever."
The company's sales volume and share price have been virtually flat for five years, as have overall U.S. beer sales. Last year, A-B started to see improvement for core brands Bud Light, Budweiser and Michelob, as well as Rolling Rock, which A-B bought from InBev's U.S. unit. But first-quarter 2008 sales for A-B's key brands fell 1.4%.
A takeover of A-B, which has 48.5% of the $90 billion U.S. beer market, would extend a global consolidation trend as the industry faces slower growth and higher costs. Last week, the Department of Justice approved a merger of the U.S. operations of SABMiller, the world's largest brewer by volume, and Molson Coors — just three years after Coors and Molson merged. Earlier this year, Heineken and Carlsberg bought Scottish & Newcastle. InBev itself is the result of a merger in 2004 of Belgium's InterBrew and AmBev, South America's largest brewer.
A-B also has moved to become a more global brewer, taking a 50% stake in Mexican Corona brewer Modelo and a 27% stake in China's Tsingtao. Last year, it also became the U.S. distributor for several InBev European brands, including Stella Artois and Becks.
Buying A-B would give InBev, known as a ruthless cost-cutting machine, an operation famous as a marketing pro. "A-B would be a much more global entity, and InBev would have another stream to reduce costs — but could potentially transform itself into a more marketing-driven organization," Steinman says.
Wachovia beverage analyst Jonathan Feeney, however, says in a report that InBev's reputation for cost-cutting "might not sit well with A-B distributors," and that could pose one problem for the deal.