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Belgian Brewer Aggressors Seek to Topple King of Beers.
American brand Budweiser, self-styled King of Beers, to become Belgian?
Has no one posted on this? Where's the outrage?
American brand Budweiser, self-styled King of Beers, to become Belgian?
Has no one posted on this? Where's the outrage?
InBev tone turns more hostile in bid for A-B
Belgian brewer InBev turned up the pressure Sunday on Anheuser-Busch Cos. to acquiesce to a takeover.
In a letter made public Sunday, InBev warned Anheuser-Busch that a rumored deal by the American brewer to acquire Mexican beer maker Grupo Modelo could threaten the $65-per-share price that InBev offered for Anheuser-Busch on Wednesday.
InBev's letter also made an indirect appeal to Anheuser-Busch shareholders, arguing that the St. Louis company has no alternative as attractive as a takeover by InBev.
Speculation grew last week that Anheuser-Busch might try to acquire the half of Grupo Modelo that it doesn't already own as a way to fend off InBev's takeover bid.
By buying the rest of Grupo Modelo — the maker of Corona and Mexico's biggest brewer — Anheuser-Busch could make itself too expensive for InBev to buy. Analysts have speculated that such a deal could cost Anheuser-Busch as much as $15 billion.
In the letter dated Sunday to Anheuser-Busch chief executive August A. Busch IV, InBev CEO Carlos Brito reiterated his desire for "a friendly combination." But that was couched in a thinly veiled warning: Anheuser-Busch shareholders could miss out on $65 a share if Anheuser-Busch combined with Grupo Modelo.
"It is important for you and your Board (of Directors) to understand that our proposal to combine with Anheuser-Busch (for $65 a share) … is made on the basis of Anheuser-Busch's current assets, business and capital structure," Brito wrote.
"We would expect," Brito told Busch, "that prior to proceeding with any alternative transaction, especially if your shareholders will not be given the opportunity to vote on it, you would first fully explore our offer and the potential adverse consequences any such transaction could have on the ability of your shareholders to receive our premium offer."
A number of institutional investors have told the Post-Dispatch that the $65-per-share offer is attractive, particularly because A-B shares have languished in recent years.
Sunday's letter is "clearly a warning," said B. Craig Hutson, a senior bond analyst at Gimme Credit. InBev is "ready to sit down with (Anheuser-Busch) and its directors, and they don't want these guys to drag their feet."
If Anheuser-Busch does not respond within the month, expect to see InBev come back with a hostile bid, he said.
Brito said last week that InBev had not directly contacted Anheuser-Busch shareholders about the offer, preferring instead to hold friendly discussions with Anheuser-Busch's board.
But in the letter's wink-wink appeal to shareholders, Brito tried to shoot down the idea that a Modelo acquisition would benefit Anheuser-Busch shareholders.
"It is our strong belief that no alternative transaction that you could effectuate would create more value for your shareholders than the $65 per share in cash that we are offering," Brito told Busch. "We are convinced that your shareholders would reach the same conclusion."
InBev's public pressure may be crucial in the event a deal between Anheuser-Busch and Modelo is structured in a way that would require shareholder approval of an acquisition.
On Friday, the Wall Street Journal reported that Anheuser-Busch and Modelo had started private talks about a possible deal. Both companies declined to comment last week; Anheuser-Busch on Sunday also declined to comment on InBev's latest salvo.
Analysts are skeptical that Anheuser-Busch could quickly execute a deal with Modelo, a family-run brewer that relishes its identity as a Mexican company.
While InBev makes a run at Anheuser-Busch, it is also courting Grupo Modelo, saying it wants to help Modelo expand its brands outside of North America.
In any case, there is debate about whether a takeover of Modelo would be in Anheuser-Busch's best interests. Modelo has had a challenging year, struggling in Mexico against competition from FEMSA, the brewer of Dos Equis and Tecate, which at the end of 2007 had about 44 percent of the market, compared with about 56 percent for Modelo.
Meanwhile, the Corona brand has weakened somewhat in the U.S.
Anheuser-Busch predicts that its equity income from Modelo and Chinese brewer Tsingtao will drop this year.
Belgian brewer InBev turned up the pressure Sunday on Anheuser-Busch Cos. to acquiesce to a takeover.
In a letter made public Sunday, InBev warned Anheuser-Busch that a rumored deal by the American brewer to acquire Mexican beer maker Grupo Modelo could threaten the $65-per-share price that InBev offered for Anheuser-Busch on Wednesday.
InBev's letter also made an indirect appeal to Anheuser-Busch shareholders, arguing that the St. Louis company has no alternative as attractive as a takeover by InBev.
Speculation grew last week that Anheuser-Busch might try to acquire the half of Grupo Modelo that it doesn't already own as a way to fend off InBev's takeover bid.
By buying the rest of Grupo Modelo — the maker of Corona and Mexico's biggest brewer — Anheuser-Busch could make itself too expensive for InBev to buy. Analysts have speculated that such a deal could cost Anheuser-Busch as much as $15 billion.
In the letter dated Sunday to Anheuser-Busch chief executive August A. Busch IV, InBev CEO Carlos Brito reiterated his desire for "a friendly combination." But that was couched in a thinly veiled warning: Anheuser-Busch shareholders could miss out on $65 a share if Anheuser-Busch combined with Grupo Modelo.
"It is important for you and your Board (of Directors) to understand that our proposal to combine with Anheuser-Busch (for $65 a share) … is made on the basis of Anheuser-Busch's current assets, business and capital structure," Brito wrote.
"We would expect," Brito told Busch, "that prior to proceeding with any alternative transaction, especially if your shareholders will not be given the opportunity to vote on it, you would first fully explore our offer and the potential adverse consequences any such transaction could have on the ability of your shareholders to receive our premium offer."
A number of institutional investors have told the Post-Dispatch that the $65-per-share offer is attractive, particularly because A-B shares have languished in recent years.
Sunday's letter is "clearly a warning," said B. Craig Hutson, a senior bond analyst at Gimme Credit. InBev is "ready to sit down with (Anheuser-Busch) and its directors, and they don't want these guys to drag their feet."
If Anheuser-Busch does not respond within the month, expect to see InBev come back with a hostile bid, he said.
Brito said last week that InBev had not directly contacted Anheuser-Busch shareholders about the offer, preferring instead to hold friendly discussions with Anheuser-Busch's board.
But in the letter's wink-wink appeal to shareholders, Brito tried to shoot down the idea that a Modelo acquisition would benefit Anheuser-Busch shareholders.
"It is our strong belief that no alternative transaction that you could effectuate would create more value for your shareholders than the $65 per share in cash that we are offering," Brito told Busch. "We are convinced that your shareholders would reach the same conclusion."
InBev's public pressure may be crucial in the event a deal between Anheuser-Busch and Modelo is structured in a way that would require shareholder approval of an acquisition.
On Friday, the Wall Street Journal reported that Anheuser-Busch and Modelo had started private talks about a possible deal. Both companies declined to comment last week; Anheuser-Busch on Sunday also declined to comment on InBev's latest salvo.
Analysts are skeptical that Anheuser-Busch could quickly execute a deal with Modelo, a family-run brewer that relishes its identity as a Mexican company.
While InBev makes a run at Anheuser-Busch, it is also courting Grupo Modelo, saying it wants to help Modelo expand its brands outside of North America.
In any case, there is debate about whether a takeover of Modelo would be in Anheuser-Busch's best interests. Modelo has had a challenging year, struggling in Mexico against competition from FEMSA, the brewer of Dos Equis and Tecate, which at the end of 2007 had about 44 percent of the market, compared with about 56 percent for Modelo.
Meanwhile, the Corona brand has weakened somewhat in the U.S.
Anheuser-Busch predicts that its equity income from Modelo and Chinese brewer Tsingtao will drop this year.
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