The Work

July 14, 2008 5:15 PM

Six Firms Helping InBev Down a $52 Billion Bud

Posted by Brian Baxter

It's almost closing time on InBev's long-awaited acquisition of Anheuser-Busch.

A month after InBev first offered to acquire A-B, the St. Louis-based brewer has accepted a sweetened offer by the Belgian-Brazilian beer maker. At $70 a share, the all-cash deal is now worth $52 billion and will create the world's largest brewer.

Apparently the bump up from the initial $65-a-share offer was enough to convince A-B CEO August Busch IV--and the company's beleaguered board of directors--that the transaction's tab was too great to pass up. As part of the deal, InBev has agreed to make St. Louis the headquarters for its North American operations and not close any of the company's 12 U.S. breweries. InBev also has agreed to keep the A-B name. The proposed new name for the merged entity: Anheuser-Busch InBev.

The announcement is surprising, given the vitriol and aggressive tactics launched by both sides in the past month, since InBev's unsolicited offer was made.

Legal teams from six high-powered global firms have been advising the parties on the transaction. InBev retained Sullivan & Cromwell and Magic Circle firms Clifford Chance and Linklaters to solidify its takeover offer, while A-B turned to Skadden, Arps, Slate, Meagher & Flom and Simpson Thacher & Bartlett.

Lead counsel for InBev are S&C M&A partners Francis "Frank" Aquila, George Sampas, George White III, and James Morphy. The firm is longtime outside counsel to InBev. (Morphy was named a Dealmaker of the Year by The American Lawyer in April for his work on a similar deal that began awkwardly but ended successfully, KKR's $27 billion buyout of First Data.)

The company also relied on Clifford Chance capital markets partner Roderick McGillivray, M&A partner Guy Norman in London, and M&A partner Philippe Hamer in Brussels, along with a Linklaters team: Brussels-based capital markets partner Francois De Bauw, capital markets counsel Gilles Nejman, and tax partner Ivo Onkelinx.

InBev--known for its Stella Artois, Beck's, and Leffe brands--is based in Leuven, Belgium, and has extensive operations in Brazil, the result of a $9.7 billion August 2004 merger with São Paulo-based Companhia de Bebidas das Américas - AmBev. Current InBev CEO Carlos Brito held the same title with AmBev.

A-B--by far the largest beer maker in the U.S., with an almost 50 percent market share--turned to international M&A partner Paul Schnell and M&A partner Thomas Greenberg at Skadden. The company's board of directors was advised by Charles "Casey" Cogut, the global head of the M&A practice group at Simpson Thacher, and M&A partners John Finley and Eric Swedenburg, litigation partners Michael Chepiga and Paul Curnin, executive compensation partner Gregory Grogan, and associates Eric Albert, Jason Rubin, Paula Han, Daniel Tseng, and Rhett Van Syoc.

The one remaining hurdle going forward seems to be Grupo Modelo, the Mexico City-based brewer partly owned by A-B. The company controls 62 percent of the Mexican beer market, and as part of its agreement with A-B, has the right of first refusal on any new partner. Grupo Modelo could buy back A-B's 50 percent ownership interest if it so chooses.

Cravath, Swaine & Moore M&A partners David Mercardo and Sarkis Jebejian and litigation partner Gary Bornstein are advising Grupo Modelo on its options in the wake of the InBev deal. The company's CEO, Carlos Fernández González, resigned from A-B's board in late June to avoid the appearance of a conflict.

If recent history is any indication, negotiations with Grupo Modelo could be quick. Skadden's Schnell happens to be the cochair of the firm's Latin American practice and the beer-making industry has been subject to a wave of consolidations in recent years, as rising costs for fuel and grain have contributed to increased transportation and manufacturing costs for brewers.

SABMiller acquired Dutch brewer Royal Grolsch and its fancy swivel caps for $1.2 billion in November 2007, and earlier this year Carlsberg and Heineken announced a $15.4 billion joint bid for Edinburgh-based Scottish & Newcastle.

The current deal between InBev and A-B is subject to shareholder and regulatory approvals and is expected to close by the end of the year.

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