Anheuser-Busch laid out a plan to cut $1 billion in costs and improve earnings as it tries to convince investors that InBev's $46.3 billion offer for the largest U.S. brewer was too low.
The plan includes cutting 10 percent of its salaried workforce through early retirement and attrition, speeding up price hikes to cope with rising commodity costs, and setting earnings forecasts that exceed Wall Street's expectations.
The company also said it planned to repurchase a total of $7 billion in shares this year and next, up from its previous repurchase target of $3.8 billion.
The blueprint does not include selling the company's packaging unit or its SeaWorld and Busch Gardens theme parks—two businesses that some analysts thought the company might divest in order to focus on its main brewing business.
Anheuser-Busch shares rose about 2 percent on the New York Stock Exchange, still below InBev's $65-a-share offer.
But one analyst questioned whether Anheuser's plan would do much to boost investors' spirits.
"A bird in the hand is worth two in the bush," said Morningstar analyst Ann Gilpin. "Are you going to take your bet that maybe the stock price can go up and management can deliver, or are you going to take $65 (a share) in cash today?"
The maker of Budweiser and Michelob beer rejected InBev's takeover bid Thursday, calling it inadequate, but left the door open to a higher bid that would create the world's largest beer maker.
InBev, which makes Beck's and Stella Artois beer, was mulling its next move after filing a lawsuit Thursday to try to establish that Anheuser-Busch shareholders could remove Anheuser's entire board of directors.
"We will carefully study the letter and will respond in due course," an InBev spokeswoman said.
Anheuser-Busch executives said they would "challenge" InBev's claim that the board could be removed without cause.
Anheuser-Busch forecast earnings in 2008 of $3.13 per share before one-time items, Chief Financial Officer W. Randolph Baker said. The company also forecast 2009 earnings of $3.90 a share, followed by double-digit percentage increases.
Analysts, on average, forecast earnings of $3.02 a share in 2008 and $3.29 in 2009.
The company, which like many food and beverage makers has been hit by soaring commodity costs, said it will raise prices in September and October on about 85 percent of its beers, rather than in 2009 as planned, Baker said.
Between price increases and a shift in sales to higher-priced products, the company expects revenue per barrel to increase 4 percent in both 2008 and 2009, he said. The company also expects a slight increase in gross margin in 2008 and a larger one in 2009, he said.
Anheuser-Busch management said InBev's offer was low on a multiple basis when compared with other recent beer industry deals and deals for other iconic consumer product brands.
Analysts said InBev will not likely give up its bid for Anheuser-Busch and say it can afford to pay more if required—certainly $70 a share and possibly up to $75.
KBS Securities analyst Wim Hoste said InBev had two options: raise its offer toward $70 per share or go hostile at the existing $65.
"I can imagine they might try through informal contact to see if there is scope to talk about an offer. If not, then they could take the hostile route," he said. "But the friendly approach is clearly better for public opinion and the workforce. The company is a U.S. icon."