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Why would InBev even want Anheuser-Busch's Bud?

It's no secret that InBev's $46.3 billion bid for Anheuser-Busch (NYSE: BUD) was aimed so that it could get its hands on the Budweiser and Bud Light brands, two of the top four selling beers in the world. Carlos Brito, Chief Executive of Belgium's InBev, said so quite clearly. Not only that, he also promised Bud would go on to be made in the same breweries, and that none in the U.S. would be shut down should the merger occurs. He also promised to keep most of management in place.

Well, for me the big question has always been why? What is this Belgian-Brazilian company fascination with beer brands that are so American -- in recognition and in taste. Well, it turns out that this is only partly true. While it is true that it is mostly Americans who drink light beers, Budweiser has actually captured sizable market share outside the U.S., like 13% in Ireland and 11.5% in Canada in 2006.

So now I understand why the maker of much superior Stella Artois would want to own the low-rated Budweiser. What's in it for Bud then? Lots. Apparently, and amazingly enough, it is in the U.S. of all places that shipments of Budweiser have dropped significantly.

But as companies that have a family or co-founder (read Yahoo's Yang) in charge do, Anheuser-Busch on a whim decided it did not want to sell to InBev. Instead, it turned to Group Modelo, the Corona maker and another company controlled by family. Anheuser-Busch already owns 50% of Modelo and a deal to buy the rest would thwart InBev's attempts as it would make BUD too big. That is too bad. At least for appearances sake, today Modelo's CEO resigned from Anheuser-Busch's board and some might even say it's a good sign as the board has more independent directors who could force the company to consider InBev's bid.

Meanwhile, Anheuser keeps on plowing and Friday said it would acquire the remaining 50% share of Crown Beers India to get distribution there.

I wonder what Buffett -- who (through Berkshire Hathaway (NYSE: BRK.A)) is the second biggest shareholder of Anheuser-Busch -- has to say about all that.

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Last updated: October 11, 2008: 07:27 PM

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