InBev and Anheuser-Busch cease fire; in friendly talks

After a month of hostilities in which Anheuser-Busch rejected InBev's $46.3 billion takeover proposal as ''financially inadequate'' and the latter filed a lawsuit to establish that shareholders could remove Anheuser's entire board of directors, the two parties are reportedly now in ''friendly talks''. (See: InBev talks tough after Anheuser-Busch rejects overtures; may increase offer)

Relations had rapidly deteriorated after Anheuser-Busch, the maker of the iconic Budweiser beer, rejected InBev's overtures to create the world's largest brewer in end-June. InBev reacted, expressing its intention to go for a hostile bid, which Anheuser-Busch countered with suing the European company. (See: Anheuser-Busch drags InBev to court)

Moreover, Anheuser-Busch's management was not the only opposition to the deal. Nationalist sentiments were also aroused in the US in what some people saw as a sell-out of an American icon (See: InBev's bid for Budweiser parent ignites nationalist sentiments in the US). The nation's lawmakers also waded into the fray. Even Barack Obama, the frontrunner for Democratic presidential nomination, said this week it would be a ''shame'' if a foreign company purchased Anheuser-Busch.

However, things seemed to have turned around now. According to latest reports in the media, Anheuser-Busch, after seeing indications of support for the InBev offer from shareholders including Warren Buffett, is now treating the offer with less hostility. It has also been suggested that InBev has raised the original offer of $65 a share to $70.

If InBev is forced to raise cash by selling additional stock, it will hurt its earnings-per-share going forward, analysts say. At $65 a share the offer would increase InBev's earnings per share by 7 per cent in 2009. A $70 bid may lead to a 1 per cent reduction by that measure, and at $75, the decline would be 10 per cent, according to some calculations.

As for jobs, InBev has pledged that it wouldn't close any of Anheuser-Busch's breweries. But it hasn't ruled out job cuts. It's also stated it would be interested in selling non-core assets, which many interpret to be Anheuser-Busch's theme parks.

InBev rose as much as 6.4 per cent and traded up €2.39, or 5.8 per cent, at €43.84 as of 2:20 p.m. in Brussels. Anheuser-Busch jumped $4.89, or 8 per cent, to $66.10 as of 8:20 a.m. New York time, before US markets opened. The shares fell 9 cents to $61.21 yesterday in New York Stock Exchange composite trading.