InBev could sell Anheuser units

InBev may be looking to sell off Anheuser-Busch’s theme park and beer-can divisions in order to raise US$4.6 billion. The money will go towards paying off debt for the purchase of the US brewer, which after a month of speculation, rumour and some hostility, was finally confirmed on Monday.

It is thought that InBev could get around US$2.9bn for the theme parks, which include Busch Gardens and SeaWorld, and US$1.7bn for divisions that make cans and bottles, as well as recycling beer containers.

The prospective sales will remove Anheuser-Busch from peripheral businesses, and help to fund the US$52bn all-cash takeover, a deal that InBev is funding with US$45bn of debt and the sale of stock.

Anheuser-Busch have been involved in family entertainment since 1959, when it opened its first theme park in Tampa, Florida. Today there are 10 sites across the US, and plans are underway to expand overseas, with four parks planned in Dubai. Busch Entertainment generated US$1.3bn of Anheuser’s revenue last year, 7% of its total.

Monday’s confirmation that Anheuser-Busch had accepted an improved offer will see the creation of the world’s largest beer maker, and a brand menu that includes Stella, Budweiser, Beck’s, Hoegaarden, Leffe, Brahma, Staropramen, Michelob and Rolling Rock.

InBev was already the world’s largest brewer by sales, and the acquisition will also make it the biggest by amount of beer sold as well.

InBev will pay US$70 per share, which is an improvement on its original, unsolicited bid of US$65 per share. The announcement represented something of a turnaround by both parties, after Anheuser chief executive August Busch IV said that he wouldn’t sell at all, and InBev CEO Carlos Brito, who will now be the CEO of the combined company, said that they would not go higher than the original bid.

The deal was said to have been thrashed out in New York over the weekend, during which sticking points such as roles for Anheuser’s executives, the structure of the board, break-up fees should the deal collapse and the name for the combined company were all addressed. The agreed upon name will be Anheuser-Busch InBev, while Anheuser will get two seats on the board.

The combined company will exceed US$36bn in annual revenue, 85% more than InBev’s 2007 sales.

Another problem that had been holding up any deal prior to Monday was the notion of a foreign company taking over an American one, an issue that proved so topical even Barack Obama came out against the deal. As it turns out, the deal will be the third-largest foreign takeover of a US company once it goes through.

Part of the problem that had concerned Washington lay in the fact that InBev are known for ruthless cost-cutting, and there are still a lot of concerns that the deal will lead to heavy job losses in the US Midwest, a fact made particularly prevalent by the looming recession.

Both firms have been quick to deny this, stating that the deal will create annual savings of US$1.5bn, and that job losses will be kept to a minimum. In a further concession to political concerns, Budweiser’s headquarters will not be moved from St.Louis, Missouri, and none of Anheuser’s US breweries will be closed.

Anheuser is particularly strong in the US market, where it earns about 85% of its profits, while InBev is strong in Western European and Latin American markets, and is growing in Eastern Europe and Asia.

InBev itself was formed by the 2004 merger of Interbrew from Belgium, and Brazil’s AmBev. They are now based in Leuven, Belgium and run by a mostly-Brazilian management team.

Anheuser-Busch’s heritage and independence stretches back around 150 years to the Bavarian brewery in St.Louis, which was bought by Eberhard Anheuser in 1860.

Alexis Hercules 16/07/08 

Correction: the drinks business apologies for mistakenly confusing the Anheuser-Busch Budweiser logo with that of Czech lager Budweiser Budvar.