Anheuser-Busch's 3Q earnings likely to rise

MILWAUKEE - Anheuser-Busch Cos., the nation's largest brewer, reports earnings for the third quarter on Thursday. The following is a summary of key developments and analyst opinion related to the period.

OVERVIEW: Anheuser-Busch, the maker of Bud Light and Budweiser, is preparing to sell itself to Belgian brewer InBev SA — ideally, both sides say — before the year ends.

The global economic slump, which is making credit more difficult to come by, could delay the $52 billion deal, first announced in July. But both companies say they're confident it will close as expected and on time.

Last month, InBev said it was postponing a $9.8 billion share issue to help finance the deal until the markets calmed. Fitch Ratings has said it expects the company to raise the equity.

Domestically, Anheuser-Busch is seeing good sales, and according to many analysts, the brewer won the peak summer-selling season.

It posted a 3.6 percent increase in sales in the summer and saw much momentum from Bud Light Lime. It has raised prices that affect over 85 percent of the company's U.S. beer sales, which is helping it recoup high input costs.

BY THE NUMBERS: Analysts polled by Thomson Financial on average expect earnings, excluding items, of $1.04 per share on $4.9 billion in revenue. That's up from the 95 cents a share the company earned last year.

ANALYST TAKE: Goldman Sachs analyst Judy E. Hong says Anheuser-Busch's third quarter indicates a strong domestic beer market. She says consumers are choosing beer instead of other beverages like wine and spirits because of value and increased marketing.

Stifel Nicolaus analyst Mark Swartzberg said, as for the deal with InBev, there's an 80 percent probability it will be completed, and 20 percent it won't. He said concerns about its financing have been pushing down Anheuser-Busch's stock. He said InBev "is on the hook for $70 cash per share to AB shareholders, financing or not." He maintains the company at a "Buy" rating and said the transaction will likely go through as they say it will.

WHAT'S AHEAD: Anheuser-Busch's shareholders are set to vote on the sale next week. InBev's shareholders have already approved the deal. Then it's a matter of the financing.

One stumbling block beyond that could be Grupo Modelo, which is 50 percent owned by Anheuser-Busch. Last month Grupo Modelo, Mexico's largest brewer, filed a notice of arbitration against Anheuser-Busch, saying the pending sale of the company violates its investment agreement. Both InBev and Anheuser-Busch have said Grupo Modelo's claims lack merit and they'll fight it.

Anheuser-Busch continues with its plans to save $1 billion total between 2008 and 2010, through cost cutting, job reductions and other efforts.

STOCK PERFORMANCE: Anheuser-Busch's shares gained about 5 percent during the quarter, to finish at $64.88.

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