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InBev to buy US beer icon after upping takeover offer

Brewer InBev SA said yesterday that it would buy US rival Anheuser-Busch for US$52 billion to create the world’s largest brewer.

The deal sees control over the US’ 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 such as China, Russia and Brazil, generating large profits as 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 — 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 US 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 US 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 US 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 two other Anheuser board members.

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, the US, 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 US and EU antitrust regulators.
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