Brewer InBev SA said Monday it will buy U.S. rival Anheuser-Busch for US$52 billion to create the world's largest brewer.
The deal sees control over America's largest brewer move overseas as it forms the fourth-largest consumer product company under the name of Anheuser-Busch InBev.
InBev promises that the takeover will help global best seller Budweiser expand into emerging markets like China, Russia and Brazil, generating large profits as costs rise and revenue from beer sales in North America and Europe fall flat.
InBev said Anheuser's board had unanimously accepted a sweetened takeover offer of US$70 a share - up from an initial bid of US$65 a share that Anheuser rejected as too low in June - just days after both companies initiated legal action that signaled the start of a hostile battle.
The two said in a joint statement that they believed the transaction was in the best interests of both, forming a global company with strong roots in the U.S. where it will also draw 40 percent of its revenue.
They said they expect cost synergies of at least US$1.5 billion a year by 2011 over three years. The deal won't benefit earnings per share until 2010, they said.
InBev, based in Leuven, Belgium, committed to keeping all of Anheuser's U.S. breweries open, saying Anheuser's St. Louis headquarters would take charge of all North American operations and remain the global home of the flagship Budweiser brand. Anheuser-Busch has more than 48 percent of the American market.
InBev's Carlos Brito, a Brazilian national, will be chief executive of the new company, heading a board that keeps Anheuser chief executive August Busch IV and one other Anheuser board member.
For InBev, the maker of Stella Artois and Beck's, the deal gives an aggressive company an iconic beer brand - Budweiser - to sell into emerging markets where it has already established a firm footprint.
It says it is the number one brewer in 10 markets where Budweiser only has a very limited presence and has a better grip on nine markets where Budweiser sells.
It will be the biggest beer seller in the world's top markets of China, U.S., Russia, Brazil and Germany and promises "significant growth opportunities" from taking Budweiser and other beers across the world.
"Together, Anheuser-Busch and InBev will be able to accomplish much more than each can on its own," Brito said in a statement.
"This combination will create a stronger, more competitive global company with an unrivaled worldwide brand portfolio and distribution network, with great potential for growth all over the world," he said.
Shareholders of both companies must approve the takeover which will also need to be cleared by U.S. and EU antitrust regulators.
InBev SA announced on June 11 that it would bid for Anheuser-Busch after long speculation that the companies were in talks - although neither would confirm more than talks about a deal for Anheuser-Busch to distribute InBev's beers in the U.S.
Anheuser voted against the merger, prompting some bitter squabbling as InBev filed a motion seeking the removal of all 13 Anheuser-Busch board members; Anheuser-Busch filed suit calling the InBev effort an "illegal scheme" that threatened to defraud Anheuser-Busch shareholders. Among other things, the suit noted that InBev failed to disclose it operates a brewery in Cuba.
Fears that InBev would make layoffs saw some U.S. politicians and civic leaders speak out against the deal. At least two Web sites also sprung up opposing the merger. SaveBudweiser.com claims to have more than 60,000 signatures from merger opponents. SaveAB.com hosted a recent anti-merger rally that drew hundreds to downtown St. Louis.
InBev is renowned for shaving costs since it was formed in a 2004 merger between Belgium's Interbrew and Brazil-based AmBev. The company has not said if it will shed Anheuser-Busch staff to make savings. But some cutbacks seem likely.
Even without the merger, Anheuser-Busch said last month it planned to cut pension and health benefits for salaried employees as part of an effort to slash US$1 billion in costs by the end of 2010. The plan called for offering early retirement to 1,300 salaried workers 55 and older.
The beer industry has been consolidating in recent years amid rising costs for transportation fuel, aluminum for beer cans and key ingredients such as hops.
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