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InBev weighs bid for Anheuser Add to ...

Belgian brewer InBev NV is weighing a takeover offer for U.S. brewing company Anheuser-Busch Cos Inc., but it is uncertain whether it will proceed with a formal bid, a source familiar with the situation said Friday.

The Financial Times reported on its Alphaville blog that the bid could be in the range of $46-billion (U.S.), and financing had been provisionally arranged through JPMorgan Chase and Santander.

The source cautioned that InBev is mulling an offer and talking to potential lenders, but no final decision had been reached.

InBev owns Labatt Brewing Cos. Ltd., which has substantial operations in Canada. However, analysts said Friday an InBev takeover of Anheuser-Busch would not likely have a major impact on Labatt Breweries of Canada.

"In the longer run, there may be some shuffling among the brands here in Canada, but that would be some distance down the road," said one Toronto-based analyst.

Another noted that there is already "a pretty strong relationship" between InBev and Anheuser-Busch on the distribution of InBev's brands in North America. Anheuser Busch shares were up 6.9 percent at $56.15. InBev closed down 2.9 percent at €48.88.

In the report on its Alphaville blog on the newspaper's website, the FT cited sources as saying the approach was expected to be pitched at $65 a share but while extensive work was being carried out InBev was not about to "push the button."

The report also said a financing package of $50-billion had been provisionally arranged through JPMorgan and Santander and that the bid had been discussed at an InBev board meeting on April 28 and at a meeting on Thursday.

Rumours have repeatedly surfaced over a possible bid by InBev - brewer of Stella Artois, Beck's and Labatt Blue, among others - for the U.S. giant, whose output includes Budweiser and Bud Light.

"Anheuser-Busch shares and options have been active throughout the week due to rumours of a takeover," said William Lefkowitz, options strategist at brokerage firm vFinance Investments in New York.

Gerard Rijk, a beverage sector analyst at ING in Amsterdam, said he felt a deal was a question of when, rather than if, a view shared by others following the sector.

"The consolidation has to continue. There are strategic synergies in North America and China," he said.

InBev, formed from the 2004 merger of Belgium's Interbrew with Brazil's AmBev, has a mature western European market and growth in Latin America, notably in key market Brazil, as well as in eastern Europe and Asia.

Anheuser is dominant in the United States, has a 50 per cent stake in Mexico's Grupo Modelo and a strong presecnce in China, through its 27 per cent holding in Tsingtao.

A deal would expand InBev's geographic presence, with little obvious overlap, boost its premium brands and see its cost-focused managers squeeze savings from the U.S. operations.

InBev already has a deal with Anheuser-Bush to distribute InBev beers in the United States.

However, InBev shares have fallen some 18 per cent in the past five weeks, partly as a result of weaker than expected first-quarter results.

Chief Executive Carlos Brito has said being the biggest is not the ultimate goal, but InBev is aware that it was overtaken as the world's largest brewer by SAB Miller last year.

Rivals Heineken and Carlsberg have also increased their size with their joint purchase of Scottish and Newcastle.

Credit Suisse said in a reseach note that the $65 a share bid mentioned in the report represented fair value, although would probably have to be higher if it were a hostile approach.

It added that Anheuser could, in defence, seek to make itself larger by taking full control of Grupo Modelo.

With files from Virginia Galt, Globe and Mail Update

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