Beer giant Anheuser-Busch on Thursday rejected a $46 billion takeover offer from Belgian-Brazilian rival InBev as "financially inadequate," likely setting the stage for a hostile bid to shareholders.
"InBev's proposal significantly undervalues the unique assets and prospects of Anheuser-Busch," said Patrick Stokes, chairman of Anheuser-Busch's board, in a statement. "The proposed price does not reflect the strength of Anheuser-Busch's global, iconic brands Bud Light and Budweiser, the top two selling beer brands in the world, with Budweiser selling in more than 80 countries today."
Stokes said the proposal "also undervalues the earnings growth actions that the company had already planned, which have significant potential for shareholder value creation; the company's market position in the United States, the most-profitable beer market in the world; and the high value of its existing strategic investments."
Anheuser-Busch on June 11 acknowledged the "unsolicited, non-binding" takeover bid from world leader InBev and said it would "review the merits" of the offer that would combine the U.S. firm with the maker of brands including Stella Artois, Beck's and Leffe and Brahma.
With a takeover, InBev, which claims the title of the world's biggest beer maker, would create close to a $100 billion business in the most ambitious act of corporate consolidation since last year's credit crunch shook the markets.
August Busch IV, president and CEO of Anheuser-Busch, outlined the reasons for the rejection in a letter to InBev CEO Carlos Brito."From your standpoint, we see that now could be opportunistic timing for you to make this acquisition, given the weak U.S. dollar and sluggish U.S. stock market," Busch said. "From the standpoint of the Anheuser-Busch shareholder, however, a transaction with InBev at this time would mean foregoing the greater value obtainable from Anheuser-Busch's strategic growth plan. We are convinced that pursuing our program will enable Anheuser-Busch shareholders, rather than InBev shareholders, to realize the inherent value of Anheuser-Busch."
InBev said in a statement earlier Thursday from Brussels that "it remains committed to its proposed combination with Anheuser-Busch," saying the bid provides "an immediate premium of 35% over the unaffected price of the shares."
InBev said it hoped to achieve a friendly takeover but was willing to take the bid directly to shareholders and take action to circumvent family control of the U.S. giant. "InBev's strong preference is to enter into a constructive dialogue with Anheuser-Busch to achieve a friendly combination that comprehensively addresses the interests of all constituents," the InBev statement said.
At the same time, InBev said it was seeking a declaratory ruling in a U.S. court in Delaware "to ensure that Anheuser-Busch shareholders preserve their voice in the process." InBev said it had filed suit in Delaware Chancery Court "seeking a judgment to confirm that shareholders acting by written consent may under Delaware law remove without cause all 13 of the present Anheuser-Busch directors, including the five elected in 2006."
Anheuser-Busch said its board "thoroughly studied the proposal with independent financial and legal advisers" before making a decision.
Copyright Agence France-Presse, 2008