Anheuser-Busch InBev Launches Rights Issue

Anheuser-Busch Inbev launched a planned eight-for-five rights issue on Monday at a steeply-discounted price of 6.45 euros per share to part-fund InBev's $52 billion purchase of Anheuser-Busch, sending its stock price down.

The offer of 986.1 million new shares, to raise $9.8 billion as part of the refinancing plan for the takeover, will run from Nov. 25 until Dec. 9, 2008.

The existing shares trade ex-rights from Tuesday, Nov. 25.

In euro terms, the total size of the new issue is 6.36 billion euros, given that InBev had pre-hedged its euro/dollar exposure at $1.5409, against the current rate of around $1.26.

Kristof Degraeve at SG Private Banking Belgium said the heavily discounted issue was certainly weighing on the stock.

"The group said it would wait until financial markets had stabilized before launching the rights issue. I don't think we can now say that financial markets have stabilized," he said.

Other analysts said the rights offer now at least removed some uncertainty for investors and that the controlling shareholders would be buying more shares than initially indicated, removing an overhang of stock.

The Belgium-listed brewer, whose shares had dropped by 16 percent on Friday amid rumors the issue would come soon, said in a statement that it expected total net proceeds after costs and expenses to be 6.26 billion euros.

ABInbev's controlling shareholders will subscribe to 2.8 billion euros in new funds.

For the remaining part of their rights, the controlling shareholders will subscribe to the maximum number of shares they can finance through the sale of ABInbev shares, ex-rights ABInbev shares or the rights themselves, the group said.

The company said that an accelerated placement of up to some 1.2 billion of ex-rights ABInbev shares was being launched on Monday on behalf of key Belgian shareholders and another part of the controlling group, Sebastien holding.

The brewer, which sealed its takeover last week, had planned to carry out the rights issue last month, but postponed it due to volatile financial markets.

It also plans to divest non-core assets to raise a further $7 billion within the next 12 months.

Chief Executive Carlos Brito has said that it could do so by selling two to three businesses.

"From a strategic point of view the deal still makes sense ... it offers more possibilities for cost savings," Degraeve said, adding however that it had become a lot less attractive with no boost to earnings per share before 2011.

BNP Paribas, Deutsche Bank and J.P. Morgan are acting as Joint Global Coordinators and Joint Bookrunners of the offering.

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