Anheuser-Busch to cut costs after saying no to bid

By Duane D. Stanford  |   2008-6-30  |     NEWSPAPER EDITION

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.