Can InBev Pressure A-B into a Deal?

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Brew Blog

Analysts see offer price exceeding $65/share.

A Reuters story today says InBev, reportedly interested in acquiring Anheuser-Busch, is trying to show A-B shareholders that “it sees a better future for North America’s biggest brewer than its family-led management.”

From the story:

Belgium’s InBev is putting pressure on Anheuser-Busch’s non-family shareholders to consider a $46 billion deal or risk being left out of a round of takeovers in the world brewing industry.

InBev, the world’s second-biggest brewer, is considering a $65 a share bid for the Budweiser maker, to show shareholders, including Warren Buffett, it sees a better future for North America’s biggest brewer than its family-led management.

“Clearly, InBev is looking to pressure Anheuser-Busch into a deal. The big problem a deal faces is the Busch family, so InBev is trying to influence the non-family shareholders,” said one banking source familiar with the situation.

Recall that August Busch III’s half-brother has stated that some members of the Busch family would be open to a sale.

The story notes that Warren Buffett, whose Berkshire Hathaway owns a roughly 5 percent stake in A-B, could prove a swing factor. From the story:

Analysts say Warren Buffett, with a 5 percent stake in Anheuser, could be key along with other non-family shareholders in determining whether InBev actually makes a friendly approach and even ultimately goes hostile. They say Buffett bought into Anheuser in early 2005 in the mid-$40/share.

The Reuters story notes that some analysts believe InBev might bid more than the $65 per share putative offer reported last week by the Financial Times’ Alphaville blog.

From the Reuters report:

Analysts see the $65 a share rumored bid as an opening shot and a higher bid of $70 or above is more likely to succeed.

Matthew Webb at Cazenove sees a take-out price of $71, being a 35 percent premium to the market price before last Friday’s reports, while Philip Morrisey at Citi sees a $70 price.

The Reuters story can be seen here.

 

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