Anheuser to Reject InBev Offer, Restructure: WSJ

Anheuser-Busch is expected to reject InBev's unsolicited $46.3 billion offer as too low and
outline its own restructuring plan, the Wall Street Journal reports.

The U.S. brewer plans to map out its own restructuring plan soon that would include the sale of nonessential assets such its theme parks in an effort to boost its stock price, the newspaper reported in its online edition, citing people familiar with the matter.


Anheuser-Busch and InBev could not be immediately reached for comment.

"It sounds dead-on. It's what we were expecting. The interesting thing is what happens next." said Tom Pirko, president of Bevmark, a Santa Barbara, California-based beverage industry consulting firm.

Pirko said a rejection from Anheuser sets the stage for InBev to either raise its bid or take its bid directly to shareholders -- options he said InBev is likely to pursue.

The rejection will unlikely deter InBev, which is prepared to take its bid directly to Anheuser-Busch shareholders through a tender offer, the newspaper said. InBev has yet to decide whether to pursue such a course, however.

"It would be surprising to think that Brito, with a bone already in his mouth, would take it out," said Pirko, referring to InBev Chief Executive Carlos Brito.

Anheuser-Busch has few takeover defenses to thwart a hostile offer, making it feasible for an unwanted suitor to acquire the company.

InBev on Wednesday prodded Anheuser-Busch by saying it remained available to discuss the $65 per share takeover bid, but time was "of the essence."

InBev said it had commitment letters for the financing for the deal and has paid $50 million in commitment fees to a 10-bank lending group.

It has been two weeks since the Belgian-Brazilian brewer launched its unsolicited $46.3 billion takeover bid for Anheuser-Busch, but the maker of Budweiser and Michelob has yet to respond.

Analysts have said that if Anheuser puts off negotiations for too long, InBev may just take its offer directly to shareholders in a hostile bid.

That could be bad for Anheuser, analysts have said, since InBev's bid would give shareholders a significant premium Anheuser would have trouble matching on its own.

The $65-a-share offer, which tops Anheuser's all-time high, is 24 percent higher than the stock's closing price the day before reports of merger talks surfaced, and 35 percent higher than the average share price over the preceding month.

Bad Timing For Theme Park Sale

If Anheuser-Busch restructures on its own, it may have a difficult time in the weak U.S. economy finding a buyer for its 10 amusement, marine and water parks -- including SeaWorld and Busch Gardens -- that drew more than 22 million customers last year, analysts have said.

Busch Entertainment, Anheuser's theme park unit, last year accounted for almost 8 percent of the company's sales and net income at $1.27 billion and $162.9 million, respectively.

Lehman Brothers valued Anheuser's theme park business at $2.9 billion. Historically, such assets have attracted bids topping 10 times cash flow, but the weak U.S. economy could weigh on any sale price and multiples may hover in the high single digits, analysts said.

Analysts and investors had expected the Anheuser-Busch to respond slowly as it explores a restructure, or other options, which may include trying to buy out Mexican brewer Grupo Modelo. Anheuser owns 50.2 percent of Corona-brewer Modelo, but has no management control.

Billionaire investor Warren Buffett, whose Berkshire Hathaway is Anheuser's second-largest shareholder, told CNBC on Wednesday that he viewed the beer battle as "an interesting spectator sport" but had not thrown his support behind either side. Barclays Global Investors is the largest shareholder in Anheuser.

Even some Busch family members are split on what the company should do.

Andrew D. Busch, a nonemployee member of Anheuser-Busch's founding Busch family, said on Saturday that he supported the U.S. brewer's efforts to remain "a strong company headquartered in St. Louis."

However Busch, who has no role in decisions about the company's future other than as a shareholder, stopped short of recommending that Anheuser should reject InBev's $65-per-share bid.

Yet another family member, Adolphus A. Busch IV, has thrown his support behind InBev, whose beers include Stella Artois, Beck's and Bass.

On Friday, he said InBev's proposal contained a number of commitments that satisfied his primary concerns and urged the board to negotiate with InBev to bring about the deal.