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NEW YORK -- Representatives for Anheuser-Busch Cos. Inc. (A-B) have officially declined what was InBev's third $46.4 billion takeover bid proposal, a decision that caused InBev to file a lawsuit today seeking a judgment to confirm that A-B shareholders can remove without cause, the company's board of directors.
"InBev's proposal significantly undervalues the unique assets and prospects of Anheuser-Busch," Patrick Stokes, chairman of the board for A-B, said in a released statement. "The proposed price does not reflect the strength of Anheuser-Busch's global, iconic brands Bud Light and Budweiser, the top two selling beer brands in the world, with Budweiser selling in more than 80 countries today. The proposal also undervalues the earnings growth actions that the company had already planned, which have significant potential for shareholder value creation; the company's market position in the United States, the most-profitable beer market in the world; and the high value of its existing strategic investments."
In order to justify declining InBev's offer of $65 a share, A-B is expected to announce an extensive reorganization aimed at bolstering profits that will include cutting more than $500 million in costs, reported The New York Times. The decision, reported the paper, may cause infighting among company brass, local politicians and shareholders.
In order to tighten its belt, the company may start slashing departmental spending such as in marketing and liquating assets such as Busch Gardens and its packaging unit. This reorganization would likely result in job cuts, a prospect angering St. Louis politicians, the city where A-B is headquartered.
"The InBev proposal fails to be competitive with alternative plans the company has developed in recent months to generate significant top-line and bottom-line growth, which will increase value for the company's shareholders," Douglas A. Warner III, the board's lead independent director, said in a released statement. "The board will continue to consider all opportunities that build shareholder value."
Pending the outcome of the lawsuit, InBev will likely change strategy opting for a hostile takeover by targeting shareholders by offering a 30 percent premium over Anheuser-Busch's shares, reported the paper.
While Anheuser-Busch's reorganization efforts are a sign the company seeks to survive, investors may dictate the future of the company.