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Anheuser-Busch to cut costs after rejecting buyout

June 28, 2008|From Bloomberg News

Anheuser-Busch Cos., moving to placate investors after rejecting InBev's $46.3-billion hostile takeover bid, said Friday that it planned to boost its stock by cutting as much as $1 billion in annual costs and buying back more shares.

The biggest U.S. brewer forecast 2008 earnings that may rise the most in six years, Chief Financial Officer Randolph Baker said during a conference call.

The board "found InBev's proposal too low," Chief Executive August A. Busch IV said during the call. "The value InBev claims to offer in proposing $65 per share assumes cost reductions Anheuser-Busch can achieve independently."

St. Louis-based Anheuser-Busch announced the plans more than two weeks after InBev unveiled its offer, which would unite Budweiser with the Belgian brewer's Stella Artois, Beck's and Bass labels.

The rejection may mean InBev will increase its bid by $7 billion, or to $75 a share, to avoid a fight, said Malcolm Polley, president of Stewart Capital Advisors. A transaction at that price would be valued at $53.5 billion.

Shares Anheuser-Busch rose 91 cents Friday to $62.26

Earnings per share in 2008 may rise 13% to $3.13, and jump 25% to $3.90 next year, Baker said, higher than analyst forecasts.

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