Anheuser Rejects InBev Bid

Anheuser-Busch said its board of directors has unanimously determined that the unsolicited proposal by InBev to acquire all outstanding shares of Anheuser-Busch for $65 per share is financially inadequate and not in the best interests of Anheuser-Busch shareholders.

Additionally, in a huge shift in its product lineup, Anheuser will stop selling all caffeinated alcoholic beverages, including its Tilt and Bud Extra brands, according to the New York attorney general’s office.

New York Attorney General Andrew M. Cuomo said an investigation showed Anheuser was illegally marketing the drinks to young people. As a result of an agreement reached by Cuomo and other attorneys general nationwide, A-B will no longer produce caffeinated Tilt, Bud Extra and other alcoholic energy drinks.

Cuomo’s investigation said Anheuser-Busch was making false or misleading statements about the health and energizing effects of Tilt and Bud Extra, and the company’s advertisements were being directed to consumers under the age of 21.

“Adding alcohol to energy drinks sends exactly the wrong message about responsible drinking, most especially to young people,” Cuomo said. “This agreement keeps these dangerous products off our shelves and makes it clear that targeting underage consumers with advertisements for alcohol will not be tolerated.”

Anheuser has also agreed to pay $200,000 to be distributed among the participating states to cover costs of the investigation and to be used for public programs. In addition to New York, Arizona, California, Connecticut, Idaho, Illinois, Iowa, Maine, Maryland, New Mexico, and Ohio were involved in the investigation. The states are conducting ongoing investigations into other producers of alcoholic energy drinks.

Regarding the proposal from InBev, Anheuser said the Belgian brewer’s offer to purchase the company undervalued the “unique assets and prospects of Anheuser-Busch.”

"The proposed price does not reflect the strength of Anheuser-Busch’s global, iconic brands Bud Light and Budweiser, the top two selling beer brands in the world, with Budweiser selling in more than 80 countries today,” said Patrick Stokes, chairman of the A-B board. “The proposal also undervalues the earnings growth actions that the company had already planned, which have significant potential for shareholder value creation; the company’s market position in the United States, the most-profitable beer market in the world; and the high value of its existing strategic investments."

The company said the board thoroughly studied the proposal with independent financial and legal advisers on multiple occasions during the two-week period since the proposal was made

August A. Busch IV, president and CEO of A-B, sent a letter to Carlos Brito, CEO of InBev, detailing the reasons the company rejected its offer.

Wrote Busch: “The board unanimously concluded your proposal is inadequate and not in the best interests of Anheuser-Busch shareholders. In reaching this conclusion, the board considered the advice of its independent financial advisers.

The Anheuser-Busch board believes that your proposed price substantially undervalues Anheuser-Busch, its key assets and its prospects.”

Among the assets and prospects that Busch said the InBev offer undervalued: A-B’s highly valued brands, it’s market leading position, it’s growth with international partners, it’s global brands and it’s accelerated growth in earnings.

“From your standpoint, we see that now could be opportunistic timing for you to make this acquisition, given the weak U.S. dollar and sluggish U.S. stock market,” Bush wrote to InBev. “From the standpoint of the Anheuser-Busch shareholder, however, a transaction with InBev at this time would mean foregoing the greater value obtainable from Anheuser-Busch’s strategic growth plan. We are convinced that pursuing our program will enable Anheuser-Busch shareholders, rather than InBev shareholders, to realize the inherent value of Anheuser-Busch.”

He added later, however, that the A-B board “is open to consider any proposal that would provide full and certain value to Anheuser-Busch shareholders.”

“We respect your desires to grow your company,” Bush wrote. “But your growth should not come at the expense of our stockholders.”

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