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Brewers reach deal to merge

July 14, 2008|From Times staff and Bloomberg News

InBev agreed to buy Anheuser-Busch Cos. for $52 billion to become the world's biggest brewer and gain almost half the U.S. market for beer, the companies said in a joint news release early today.

The combined company will be called Anheuser-Busch InBev, and both companies' boards of directors have approved the deal unanimously.

The takeover of Anheuser-Busch in St. Louis would be the second-biggest acquisition of a consumer-goods company and ends a month of court fights and public disputes over the future of the 156-year-old maker of Budweiser.

St. Louis would become the headquarters for the North American region and the global home of the flagship Budweiser brand. About 40% of the combined company's revenue would be generated in the U.S. Anheuser-Busch would become a subsidiary of InBev.

InBev's chief executive, Carlos Brito, would be CEO of the combined company. Anheuser-Busch Chief Executive August Busch IV and one other current or former director would join the InBev directors on the new board.

InBev, based in Leuven, Belgium, has more annual sales than any other brewer, and would overtake SAB Miller as the world's largest beer maker in volume terms by putting Anheuser-Busch's Budweiser brand together with Bass ale and Beck's lager.

Anheuser-Busch shares rose 26% after reports of InBev's planned bid in May, and they gained $5.29, or 8.6%, to $66.50 on Friday.

Brito has said the combined company's more than $36 billion in annual sales and 12 billion gallons of shipments also would allow the negotiation of better terms from suppliers as expenses soar for barley, hops, electricity and metal for cans.

But InBev may have trouble lowering costs given potential resistance from Anheuser-Busch's unions and the low market overlap between the two companies, said Wachovia Securities Inc. analyst Jonathan Feeney.

The Belgian giant will get control of half of the U.S. beer market and aims to grow in China, where Anheuser-Busch owns 27% of the country's second-largest brewer.

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