Published on ShanghaiDaily.com (http://www.shanghaidaily.com/)
http://www.shanghaidaily.com/sp/article/2008/200806/20080630/article_365010.htm
Anheuser-Busch to cut costs after saying no to bid
Created: 2008-6-30
Author:Duane D. Stanford
BREWER Anheuser-Busch Cos is placating investors after rejecting InBev NV's US$46.3-billion hostile takeover bid by planning to cut up to US$1 billion in annual costs and buying back more shares.
The biggest United States beer maker forecast 2008 earnings that may rise the most in six years, said Chief Financial Officer Randolph Baker, sending the shares up as much as 2.4 percent in New York trading last Friday.
The board "found InBev's proposal too low," Chief Executive Officer August A. Busch IV said. "The value InBev claims to offer in proposing US$65 per share assumes cost reductions Anheuser-Busch can achieve independently."
Anheuser-Busch announced the plans more than two weeks after InBev unveiled its offer, which would unite Budweiser beer with Stella Artois, Beck's and Bass. The rejection may mean Belgium-based InBev will increase its bid by US$7 billion, or to US$75 a share, to avoid a fight, said Malcolm Polley, president of Stewart Capital Advisors LLC.
A transaction at that price would be valued at US$53.5 billion. InBev will study Anheuser-Busch's response, said a spokeswoman, adding that the brewer's offer was "full" and "fair."
Anheuser-Busch, based in St Louis, gained 91 cents, or 1.5 percent, to US$62.26 in New York Stock Exchange composite trading last Friday. InBev fell 86 cents, or 1.9 percent, to 44.14 euros in Brussels, the lowest since October 2006. Earnings per share in 2008 may rise 13 percent to US$3.13, and jump 25 percent to US$3.90 next year, said Anheuser-Busch's Baker. The company owns 27 percent of China's Tsingtao Brewery Co.
Eleven analysts surveyed by Bloomberg News estimated average profit of US$3.02 a share in 2008. Twelve predicted profit of US$3.30 in 2009.
Anheuser-Busch will increase its share buyback goal for 2008 to US$3 billion from US$2 billion, Baker said. It plans to repurchase another US$4 billion of shares in 2009. The brewer will also cut its workforce 10 percent to 15 percent, or as many as 1,290 jobs, through an early retirement program, he said.
Shareholder vote
August Busch IV told InBev before the Belgian brewer put its proposal in writing that his company wasn't for sale, and that "he and his board are committed to remain independent," InBev said in a filing to a Delaware court. InBev asked a court to rule that shareholders can remove all 13 members of Anheuser-Busch's board by written consent at the same time.
Busch said that Anheuser-Busch will challenge InBev on the matter.
While the CEO told distributors in April that the company wouldn't be sold while he was in charge, the family, which has run Anheuser-Busch for five generations, doesn't own enough shares to sway a shareholder vote on the board. Directors and executives hold 4.5 percent of the company's shares, according to a regulatory filing earlier this year. "The board is open to consider any proposal that would provide full and certain value to Anheuser-Busch shareholders," the company said.
InBev wrote to Anheuser-Busch for a third time last week to request takeover talks, and said it paid lenders US$50 million to get financing commitments for its offer.
The biggest United States beer maker forecast 2008 earnings that may rise the most in six years, said Chief Financial Officer Randolph Baker, sending the shares up as much as 2.4 percent in New York trading last Friday.
The board "found InBev's proposal too low," Chief Executive Officer August A. Busch IV said. "The value InBev claims to offer in proposing US$65 per share assumes cost reductions Anheuser-Busch can achieve independently."
Anheuser-Busch announced the plans more than two weeks after InBev unveiled its offer, which would unite Budweiser beer with Stella Artois, Beck's and Bass. The rejection may mean Belgium-based InBev will increase its bid by US$7 billion, or to US$75 a share, to avoid a fight, said Malcolm Polley, president of Stewart Capital Advisors LLC.
A transaction at that price would be valued at US$53.5 billion. InBev will study Anheuser-Busch's response, said a spokeswoman, adding that the brewer's offer was "full" and "fair."
Anheuser-Busch, based in St Louis, gained 91 cents, or 1.5 percent, to US$62.26 in New York Stock Exchange composite trading last Friday. InBev fell 86 cents, or 1.9 percent, to 44.14 euros in Brussels, the lowest since October 2006. Earnings per share in 2008 may rise 13 percent to US$3.13, and jump 25 percent to US$3.90 next year, said Anheuser-Busch's Baker. The company owns 27 percent of China's Tsingtao Brewery Co.
Eleven analysts surveyed by Bloomberg News estimated average profit of US$3.02 a share in 2008. Twelve predicted profit of US$3.30 in 2009.
Anheuser-Busch will increase its share buyback goal for 2008 to US$3 billion from US$2 billion, Baker said. It plans to repurchase another US$4 billion of shares in 2009. The brewer will also cut its workforce 10 percent to 15 percent, or as many as 1,290 jobs, through an early retirement program, he said.
Shareholder vote
August Busch IV told InBev before the Belgian brewer put its proposal in writing that his company wasn't for sale, and that "he and his board are committed to remain independent," InBev said in a filing to a Delaware court. InBev asked a court to rule that shareholders can remove all 13 members of Anheuser-Busch's board by written consent at the same time.
Busch said that Anheuser-Busch will challenge InBev on the matter.
While the CEO told distributors in April that the company wouldn't be sold while he was in charge, the family, which has run Anheuser-Busch for five generations, doesn't own enough shares to sway a shareholder vote on the board. Directors and executives hold 4.5 percent of the company's shares, according to a regulatory filing earlier this year. "The board is open to consider any proposal that would provide full and certain value to Anheuser-Busch shareholders," the company said.
InBev wrote to Anheuser-Busch for a third time last week to request takeover talks, and said it paid lenders US$50 million to get financing commitments for its offer.
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