Hostile Takeover?

(07-08) 04:00 PST St. Louis — The battle for America’s iconic beer turned nasty Monday, with brewer InBev escalating its offer for Anheuser-Busch Cos. Inc. into a hostile bid, while the maker of Bud accused the Belgian company of undervaluing its worth.

InBev said it will try to remove Anheuser-Busch’s entire board of directors, and the St. Louis company responded by calling the move an attempt to use a hand-picked board to buy the nation’s biggest brewery at a discount.

Anheuser-Busch’s directors rejected InBev’s $65 a share price two weeks ago as inadequate, but said the company would consider a higher price.

InBev SA, the maker of Stella Artois and Beck’s, wants Anheuser-Busch to respond to its proposal on the board within 10 days. InBev said it was acting because Anheuser-Busch has refused to talk about its offer.

In an aggressive move to bypass Anheuser-Busch’s board, InBev filed paperwork with U.S. regulators Monday, asking Anheuser-Busch’s shareholders to submit a motion to the company that would fire its board members and replace them with an alternate slate.

The brewer proposed an alternate board, including Adolphus Busch IV, the uncle of Anheuser-Busch CEO August Busch IV, that would give shareholders a direct voice in the takeover, InBev said.

If a majority of shareholders go along with InBev’s $46 billion bid for Anheuser-Busch, they could remove the board and approve the Belgian brewer’s offer for the company.

While the rhetoric between the two companies grows more hostile by the week, their statements Monday indicated there might be room for a negotiated purchase.

Carlos Brito, InBev’s chief executive, said he prefers to negotiate with Anheuser-Busch. He said InBev’s $65 a share offer is well above the company’s $50 per-share price before the stock’s value was inflated by market speculation about InBev’s offer.

While insisting the previous offer was too low, Anheuser-Busch’s statement Monday said it “would be open to consider any proposal that would provide full and certain value to Anheuser-Busch shareholders.”

Anheuser-Busch Cos. Inc.’s board has laid out its own plan for earnings growth that would cut costs and increase prices to boost the stock’s value over the next few years.

It’s unclear how institutional shareholders will react to InBev’s offer. However, it seems likely most would choose to accept $65 in cash immediately instead of waiting years for Anheuser-Busch’s plan to boost value, said Bill Finnie, adjunct professor of strategy at Washington University’s Olin School of Business in St. Louis.

But that doesn’t mean InBev’s hostile bid is a sure thing, said Finnie, who retired from Anheuser-Busch as director of strategic studies and planning in 1991. A hostile takeover could create ill will among consumers and Anheuser-Busch employees, making it difficult for InBev to integrate the two companies and boost sales with U.S. customers, he said.

Anheuser-Busch might be open to a price of $70 a share and an agreement that InBev would move its global headquarters to St. Louis, Finnie said.

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