InBev Closes Anheuser-Busch Acquisition - update

(RTTNews) - Belgian brewer InBev Tuesday announced it has completed the acquisition of U.S. beer producer, Anheuser-Busch Companies Inc. (BUD | Quote | Chart | News | PowerRating), following approval from shareholders of both companies. The $52 billion deal makes the combined entity the world's largest brewer.

Effective today, InBev would be known as Anheuser-Busch InBev. From November 20, the company will trade under the new ticker symbol ABI on the Euronext Brussels stock exchange.

Anheuser-Busch has now become a wholly owned subsidiary of Anheuser-Busch InBev and will retain its current headquarters in St. Louis, Missouri. The North American headquarters for the combined company will also be St. Louis.

The combined entity will be geographically diversified, with leading positions in the world's top five markets, China, U.S., Russia, Brazil and Germany. InBev Chief Executive Officer, Carlos Brito, will be chief executive of the combined company.

Carlos Brito, CEO of Anheuser-Busch InBev said, "By bringing together these two great businesses, we have created a stronger, more competitive global company with a leading international brand portfolio and distribution network, and great potential for growth all over the world."

InBev received all regulatory clearances required to be obtained in order to proceed with completion. The U.S. Department of Justice granted conditional approval for the takeover proposal. InBev reached an agreement with the DoJ to undertake certain actions to address competition concerns relating to the combination of InBev USA's sales of Labatt branded beer and Anheuser-Busch's sales of beer in upstate New York are implemented following closing of the deal.

Under the deal with the DoJ, Labatt Brewing Co. Ltd. or LBCL, a partially owned, indirect subsidiary of InBev headquartered in Toronto, Canada, will grant to an independent third party a perpetual exclusive license to market, distribute and sell Labatt branded beer for consumption in the U.S.

The agreement will also allow brewing such Labatt branded beer in the U.S. or Canada solely for sale for consumption in the U.S. and permit using the relevant trademarks and intellectual property to do so.

Leuven, Belgium-based InBev will sell to the licensee the assets or stock of InBev USA LLC d/b/a/ Labatt USA, an InBev subsidiary, headquartered in Buffalo, New York, whose staff currently handles the importing, marketing and sale of Labatt branded beer to wholesalers in the United States.

The divestiture of the Labatt business in the United States was indicated to follow the closure of the Anheuser-Busch merger deal. LBCL will brew and supply the Labatt branded beer for the licensee for an interim period of no more than three years.

The consent final judgment does not affect Kokanee, Brahma or any other brands brewed by LBCL, AmBev or InBev and distributed in the United States, other than the Labatt branded beer. The move does not affect the brewing, marketing, distribution or sale of Labatt branded beer in Canada or anywhere else outside the United States.

InBev, the world's second-largest beer maker, was formed in 2004 through the successful combination of Interbrew and South America's AmBev. The company currently dominates the Latin American beer market, however, had only about 1% of the beer volume in the U.S. market. The U.S. beer market, valued at about $97 billion, is the second largest in the world by volume, next to China. Anheuser-Busch has 48.5% share of U.S. beer sales.

In June earlier this year, InBev offered to take over Anheuser-Busch in a deal valued at $46 billion. A fortnight later, Anheuser-Busch officially rejected the bid citing under-valuation of the company. InBev, in a valiant attempt to gain control, tried to persuade shareholders of Anheuser-Busch to vote in favor of the buyout stating that its offer of $65 per share is a reasonable one in view of the falling stock market. InBev also filed a lawsuit in Delaware to legally create a space for Anheuser-Busch's shareholders to eject members out of its board room.

The deal was, however, vehemently opposed by Anheuser-Busch's founding family members, including President and Chief Executive Officer, August Busch IV. At the same time, Anheuser-Busch faced criticism for rejecting the deal, which was supported by some of its largest shareholders. In July, InBev then sweetened its bid to an irresistible $70 per share, in an attempt to soften Anheuser-Busch's stance.

Last week, Anheuser-Busch settled all of the shareholder litigations regarding its pending merger with InBev and is subject to approval by the Delaware Court of Chancery.

The two companies already have a U.S. distribution partnership for InBev's European premium import brands including Stella Artois, Beck's and Bass. Anheuser-Busch's sales and distribution system will continue to support the expansion of these brands in the U.S. market. Also, Anheuser-Busch's Budweiser and Bud Light are the largest selling beers in the world, and the combined company will have an unmatched portfolio of imports, local premiums and local core brands.

Further, Anheuser-Busch has equity investments in two companies with brands in two key markets, Mexico's Grupo Modelo, which owns Corona Extra, and Chinese brewer Tsingtao. Grupo Modelo said in July that it has evaluated the proposed transaction between Anheuser-Busch and InBev. In addition, InBev's business in southeastern China is expected to be enhanced by Anheuser-Busch's strength in northeastern China.

Upon closing of the acquisition of Anheuser-Busch, several management and board of director changes were made.

Luiz Fernando Edmond, currently Zone President Latin America North and AmBev's Chief Executive Officer, becomes Zone President North America. Dave Peacock, who most recently served as Vice President of Marketing of Anheuser-Busch Inc. and Chief Executive Officer of Wholesaler Equity Development Corp., a wholly-owned subsidiary of Anheuser-Busch Companies Inc., becomes President of Anheuser-Busch.

Joao Castro Neves becomes Zone President Latin America North and AmBev's Chief Executive Officer, and the incumbent Zone President for North America, Bernardo Pinto Paiva, has become Zone President Latin America South, replacing Joao.

The board of the combined company will comprise existing directors of the InBev board and former Anheuser-Busch President and CEO August Busch IV.

BUD last traded on Nov. 17 at $68.58 on a volume of 1.62 million shares. The stock has been moving in a range of $45.55 - $69.26 for the past 52 weeks, with a three-month average volume of about 10.03 million shares.

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