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Anheuser-Busch board of directors rejects InBev’s takeover bid

Anheuser-Busch's board on Thursday has unanimously rejected a Belgian-Brazilian brewer's takeover bid, saying the $46 billion offer undervalues the Budweiser maker.

Anheuser-Busch's board on Thursday has unanimously rejected a Belgian-Brazilian brewer's takeover bid, saying the $46 billion offer undervalues the Budweiser maker.

June 27, 2008

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— The board of directors of Anheuser-Busch Cos. has unanimously rejected a $65-a-share takeover bid from InBev of Belgium, calling the proposal "financially inadequate and not in the best interests of Anheuser-Busch shareholders."

"InBev's proposal significantly undervalues the unique assets and prospects of Anheuser-Busch," said Patrick Stokes, chairman of the board for the company, in a statement. "The proposed price does not reflect the strength of Anheuser-Busch's global, iconic brands Bud Light and Budweiser, the top two selling beer brands in the world, with Budweiser selling in more than 80 countries today."

Stokes said the proposal "also undervalues the earnings growth actions that the company had already planned, which have significant potential for shareholder value creation; the company's market position in the United States, the most-profitable beer market in the world; and the high value of its existing strategic investments."

Douglas A. Warner III, the board's lead independent director, said InBev's proposal "fails to be competitive with alternative plans the company has developed in recent months to generate significant top-line and bottom-line growth, which will increase value for the company's shareholders." In a statement, he said the board would continue to consider all opportunities that build shareholder value.

In a letter to InBev chief executive Carlos Brito, August A. Busch IV said Anheuser-Busch's beer brand building expertise is "an asset without comparison." Busch, CEO of Anheuser-Busch, said that expertise is just one asset InBev undervalued.

Busch also said "recent change of control acquisitions of other major consumer product companies with iconic brands have been valued at much higher multiples than what you have proposed for Anheuser-Busch shareholders."

Busch said Anheuser-Busch has expanded its productivity plan to slash $1 billion in costs through 2010 - compared to the latest public plan of cutting more than $400 million over the next four years. But the company gave few other details as to its strategic plan.

In the letter dated Thursday, Busch told Brito that "a transaction with InBev at this time would mean foregoing the greater value obtainable from Anheuser-Busch's strategic growth plan. We are convinced that pursuing our program will enable Anheuser-Busch shareholders, rather than InBev shareholders, to realize the inherent value of Anheuser-Busch."

But Anheuser-Busch's position does not address the company's "fundamental lack of top-line growth prospect," Standard & Poor's analyst Esther Kwon wrote after the company's announcement. She said the rebuttal was unlikely to deter InBev's interest, and that a "reasonable probability" remains of the deal being completed at $65 per share.

"Our two companies know each other well and have a close dialogue and relationship" including joint agreements in the U.S., Canada and South Korea, Busch told Brito in Thursday's letter. "As you say yourself, you dream big. We respect your desires to grow your company. But your growth should not come at the expense of our stockholders."

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