Shares of Anheuser-Busch hit an all-time high Friday on reports that Europe’s InBev SA was working on a US$46 billion bid for the St. Louis-based brewer.
The share surge followed a report on the Financial Times website that InBev, the world’s biggest brewer by volume, may directly approach Anheuser chief executive August Busch IV.
Anheuser-Busch declined comment, and messages left with InBev were not returned.
“It is our policy to not confirm, deny or speculate on rumours of potential investments, acquisitions, mergers, new business partnerships or other transactions,” said W. Randolph Baker, Anheuser-Busch’s vice-president and chief financial officer.
InBev makes Beck’s, Brahma, Stella Artois and Skol beer and owns Labatt Breweries in Canada. Reports of its interest in Anheuser-Busch have circulated for months.
Anheuser-Busch makes Budweiser and Bud Light. The company has an estimated 50.9% domestic market share.
Ken Crawford, an analyst with Argent Capital of suburban St. Louis, said the deal would make sense for Anheuser-Busch.
“We see a company that’s very, very profitable, generates a lot of cash,” Crawford said of Anheuser-Busch. “The question is: Where and how do they grow? It would not be unrealistic that they look abroad either for acquisitions or to partner with someone.”
It would be just the latest deal in a consolidating beer industry. Miller Brewing Co., the second-largest U.S. beer-maker, and No. 3 Molson Coors Brewing Co. are planning to combine U.S. operations in a deal expected to be completed by midsummer. Miller will distribute Grolsch in the U.S. after a February takeover by SABMiller of Europe.
Crawford said the impact on consumers remains to be seen.
“We don’t know if greater purchasing power would decrease costs and control prices, or if consolidation in the industry would allow those remaining to price more aggressively,” he said.
Anheuser-Busch operates 12 breweries in the U.S. and has operations around the globe, with a growing presence in China and Mexico.
Anheuser-Busch saw its profit slip 1.4% in the first quarter in results announced last month. The company said higher costs for beer ingredients more than offset rising revenue.
