Buffet To Back InBev Takeover of Anheuser-Busch

uesday, June 17, 2008 - 4:07 PM EDT
Warren Buffett to back InBev takeover of Anheuser-Busch
Atlanta Business Chronicle

Warren Buffett, the world's richest man and chairman of Berkshire Hathaway Inc., plans to tell Anheuser-Busch Cos. chief August Busch IV that he supports Belgian brewer InBev's proposed $46.3 billion takeover offer of the Budweiser brewer according to an article Belgian newspaper De Standard posted on its Web site Tuesday.

Omaha, Neb.-based Berkshire Hathaway owns more than 35.3 million shares, or 4.9 percent, of Anheuser-Busch stock, and is believed to be the brewer's second-largest shareholder behind the 5.7 percent held by Barclays Global Investors NA of San Francisco. Berkshire Hathaway's stake in Anheuser-Busch is worth nearly $2.3 billion at the current offer price of $65 per share.

Media reports have indicated Buffett plans to speak this week with Busch IV, the brewer's president and CEO, about the proposed deal.

A Berkshire Hathaway spokeswoman was not immediately available for comment.

Per company policy, Anheuser-Busch does not confirm, deny or speculate on rumors of potential investments, acquisitions, mergers, new business partnerships or other transactions.

The Business Journal reported June 6, before InBev formally extended its takeover bid, that if Buffett sees a valuable opportunity in a deal between InBev and Anheuser-Busch, it is possible he could take an active and influential position in the negotiations.

On April 28, he played a critical role in the acquisition of another venerable, family-run public company when he partnered with privately held candy maker Mars Inc. in a $23 billion joint bid for Wm. Wrigley Jr. Co., the Chicago company behind such famous chewing gum brands as Doublemint, Big Red, Juicy Fruit and Orbit.

"Mr. Buffett, who holds a 5 percent stake in Anheuser-Busch Inc., has a notable reputation for assisting in matters where family ownership is at stake," said Adolphus Busch IV, an uncle to August Busch IV and a company shareholder, in a statement. "His participation in the recent merger of Wrigley and Mars Inc. is evidence of his integrity. Should Mr. Buffett see this merger as a positive action for all shareholders involved, the likelihood of a deal will increase enormously."

Research firm Gimme Credit issued a note Monday morning that said, "If Mr. Buffett makes any public statement in support of InBev's bid, it's game over for the Busch family's takeover defense efforts."

Ann Gilpin, an analyst with Morningstar in Chicago, said Buffett's involvement shows the enormous amount of pressure on Anheuser-Busch's board from the company's shareholders.

"Warren is probably on the side of the table that he wants the deal done," Gilpin said. "You are not going to get a price like this on a stand-alone basis."

St. Louis-based Anheuser-Busch Cos. Inc. (NYSE: BUD), through its Anheuser-Busch Inc. subsidiary, is the leading domestic brewer, holding a 48.5 percent share of U.S. beer sales. It is the main domestic competitor to Milwaukee-based Miller Brewing Co., which is expected to complete a merger with Coors Brewing Co., of Golden, Colo., around the end of the month.

Atlanta Business Chronicle