Anheuser-Busch, the largest US brewer, on Friday said it would cut jobs and increase share buybacks as it set out its justification for rejecting a $46bn bid from rival global brewer InBev. August Busch IV, chief executive, told investors that the company’s board had taken the bid “very, very seriously,” but had concluded that it undervalued Anheuser when compared to similar transactions in the global beer business involving iconic brands. Anheuser board set to discuss InBev bid - Jun-19He also said that Anheuser had concluded the $65 per share bid was too low in comparison with the value that could be delivered by the company’s own strategic plan, and assumed cost savings that Anheuser could realise on its own.
In a step towards achieving over $1bn of cost savings in the next two years, Anheuser said it would cut 10 to 15 per cent of its salaried workforce of 8,600 through an early retirement programme. It also said it would increase planned share buy-backs this year to $3bn from $2bn previously and to $4bn from $1.8bn in 2009.
It also forecast that its earnings per share this year would increase in the low double digits, ahead of Wall StreetÂ’s current consensus estimate of an 8 per cent increase in earnings. However, it did not announce any plans to dispose of non-core assets such as its theme parks or packaging operations.
Anheuser did not definitively reject the possibility of a deal with InBev, should the Belgium-based brewer raise its offer. It also argued that its new strategic initiatives were already underway before it received the InBev offer. InBev, the world’s largest brewer, said on Thursday in court documents that it was prepared to launch a proxy battle seeking the removal of Anheuser’s entire board, citing “delays and apparent plans to attempt to block the acquisition”.
It also said it still wanted a “constructive dialogue” over its $65-a-share offer. The exchange set the stage for a high-profile international battle for control of Anheuser, which controls almost half of the US beer market. InBev’s court filing said that it had been told by Mr Busch before launching the bid that he was opposed to any offer, and that Anheuser was “not for sale”. Mr Busch, according to InBev, also said he and his board were committed to the company’s independence.
InBev, meanwhile, is asking the Court of Chancery in Delaware, where Anheuser is incorporated, for a declaratory ruling that would confirm the shareholdersÂ’ right to remove all 13 of AnheuserÂ’s board members, without giving cause. The brewer is asking for clarification of the legal status of five of the directors appointed in 2006, before changes were made that allow the removal of board directors by written consent.
John Coffee, a professor of corporate law at Columbia University, said the move to request the ruling from the Delaware courts was highly unusual, and characterised the filing as “an initial opening tactic” by InBev’s legal team. Anheuser said on Friday it would contest the action.