Why Anheuser is a takeover target

By Duncan Bartlett Europe Business Reporter, BBC News, Brussels

Budweiser is Anheuser-Busch's flagship brand

Their two signature brands are very different. Anheuser-Busch's Budweiser is a pale lager, flavoured with rice and wood chips.

Whereas Inbev's Stella Artois is a strong rather bitter tasting beer which resembles a pilsner.

However, Stella is just one part of a huge international portfolio of drinks produced by Inbev, which was formed from a merger of Belgium's Interbrew and the Brazilian company Ambev in 2004.

The chief appeal of buying Anheuser-Busch is that it would give the company a huge stake in the world's two largest beer markets, the US and China.

Anheuser-Busch owns a stake in China's largest brewery and is enjoying a healthy rise in beer sales there.

However, in the developed world, the beer market is no longer growing, leading many brewers to consider mergers and acquisitions in order to boost their businesses.

'Synergies'

If the deal does goes through, Inbev will want to make cost savings and that could mean job cuts.

"There are a lot of synergies that can come from merging two beer companies," said Phillippe Labilloy, a brewing analyst at Petercam Research in Belgium.

"You can increase purchasing power, improve the distribution and easily reduce costs by removing one of the headquarters," he said.

Shutting Budweiser's famous headquarters in St Louis, Missouri, would be a hugely controversial move that probably would not be accepted in the United States. But there are 40 other Anheuser-Busch breweries around the world which might face the axe.

So far, Anheuser-Busch has neither accepted nor rejected the Inbev offer, although Petercam Research and other analysts think the price Inbev is offering seems rather low at $65 (�33) per share.

Some US politicians have expressed concern about the deal on patriotic grounds and 30,000 people have signed an online petition saying they want Budweiser to remain American.

"I think Budweiser is wrapping itself in the American flag and that's always been part of its marketing. But if the price is right, it will be sold," said Larry Nelson of Brewer's Guardian.

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