KEY POINTS:
Carlos Brito, chief executive of Belgian-Brazilian brewing giant InBev, did everything but hand-deliver chocolate and flowers in his bid to woo August Busch IV, his counterpart at US brewing icon Anheuser-Busch.
His presentation on the US$46.4 billion (NZ$61.4 billion) bid for Anheuser was peppered with compliments and safeguards
for its American heritage.
"I have a deep respect and admiration for Anheuser-Busch and its management," he said, adding: "Anheuser-Busch is one of the most recognised and loved brands in the world," and: "I strongly value the Anheuser-Busch heritage."
Far from stripping out its offices in St Louis, Missouri, the city would be made the global headquarters for the Budweiser brand and the name of the merged company would reflect its heritage.
While Brito stopped short of guaranteeing there would be no job cuts, he promised there would be no brewery closures and said the global role could "create new opportunities" .
So far, however, his flattery seems to be having little impact on Busch and his board - not to mention St Louis statesmen, who are united against the bid, and its beer drinkers, who have set up savebudweiser.com to campaign for its independence.
While the only public response has been a terse promise to "make its determination regarding InBev's proposal in due course", the private response has been cool.
InBev has been rumoured to be interested for more than a year and to have made a formal approach at least six weeks ago; resorting to making the bid public undoubtedly reflects Brito's frustration at the lack of progress.
Anheuser is one of a dwindling band of family businesses with a proud heritage. While the founders' stake is now just 3.5 per cent, it has been led by a member of the Busch family since German immigrant Adolphus Busch married Eberhard Anheuser's daughter Lily and started working in his brewery in 1864.
They have done a good job: Anheuser is the market leader in the US and the world's third-largest brewer.
But the beer market is changing: consumption in developed markets is falling and, while Anheuser does have a joint venture with Mexico's Modello, owner of the Corona brand, and a joint venture in China, the US still accounts for 80 per cent of its profits. Consolidation has become the industry's byword. InBev itself is the product of a merger between Brazil's Am-Bev and Interbrew of Belgium four years ago; Heineken and Carlsberg are in the process of carving up Scottish & Newcastle between them; while SAB Miller - the world's largest brewer, with brands such as Peroni and Coors - is itself the product of a merger in 2002.
Brito boasted that a combination of the two businesses would catapult the group into the top five global consumer companies.
Globally, too, it would be a good fit - even in China, the companies work in different regions: InBev in the south, Anheuser in the north - reducing any potential monopoly issues.
Some analysts speculated that it would also plug a looming hole in InBev's growth prospects following a poor first quarter this year and a warning that the second quarter may not be much better, but Brito robustly rejected that: "We have been in this business for 20 years. We have had tough quarters before."
InBev says it has signed up a list of banks, headed by JP Morgan, to fund the US$40 billion of debt needed to finance the takeover. Stretching the price to US$70 a share, which analysts speculate he may have to pay, means he would have to find an extra US$3.5 billion.
He will also have to find buyers for more than US$8.3 billion of assets to fund the equity proportion of the takeover.
Given that the offer is 35 per cent above the price at which Anheuser was trading before the news of InBev's approach leaked, and 18 per cent above its all-time peak, Anheuser will have to work hard to persuade external shareholders - led by veteran value investor Warren Buffett - that they should reject it.
Whatever happens, the saga could take as long to mature as one of InBev's casks of Stella Artois.
- OBSERVER
