Finance news

ST. LOUIS–Shares of Anheuser-Busch hit an all-time high yesterday on reports from a source familiar with the situation that Europe’s InBev SA was working on a $46-billion (U.S.) bid for the St. Louis-based brewer.

Anheuser-Busch shares rose 6.7 per cent, or $3.54, to $56.12 in midday trading after reaching as high as $58. Shares closed at $56.61, up $4.03 or 7.7 per cent in New York.

The share surge followed a report on the Financial Times web site that InBev, the world’s biggest brewer by volume, may directly approach Anheuser chief executive August Busch IV. The source told Reuters an offer was not certain.

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 chief financial officer.

InBev makes Beck’s, Brahma, Stella Artois and Skol beer and owns Labatt Breweries of Canada. Reports of its interest in Anheuser-Busch have circulated for months.

Anheuser-Busch makes Budweiser and Bud Light and has an estimated 50.9 per cent domestic market share.

Ken Crawford, an analyst with Argent Capital of 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 beer maker in the United States, and No. 3 Molson Coors Brewing Co instant cash advance. plan 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 has been a St. Louis icon since the mid-19th century.

Eberhard Anheuser acquired the Bavarian brewery in 1860 and renamed it E. Anheuser & Co. His son-in-law, Adolphus Busch, joined in 1864 and the company was eventually renamed Anheuser-Busch.

The company survived Prohibition by selling products ranging from ice cream to root beer.

Ground was broken in Newark, N.J., in 1950 for its first brewery outside of St. Louis. Today, Anheuser-Busch operates 12 breweries in the United States, with operations worldwide, including China and Mexico.

Last month, Anheuser-Busch reported profits slipped 1.4 per cent in the first quarter, as higher costs more than offset rising revenue. Sales of core brands such as Budweiser and Bud Light have also fallen as consumers increasingly opt for cocktails, wine and craft beers.

Brewers around the world have been hurt in recent months by a spike in the price of key ingredients.

InBev posted an unexpected 11 per cent drop in its first-quarter profit on May 8, also blaming rising ingredient costs as well as shipping costs and weak sales in Brazil, where it does half its business.

From the Star’s wire services

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