InBev needs to brew up a $70 Budweiser beer bid

By David Jones - Analysis

LONDON (Reuters) - Bold moves are what created brewing giant InBev INTB.BR and it needs one more as analysts say its bid for Budweiser maker Anheuser-Busch (BUD.N) will likely have to rise by more than $3 billion to succeed.

InBev took aim at the St Louis-based brewer last week with a bid at $65 a share or $46.3 billion and attempted to woo its shareholders into a friendly deal to create the world's largest brewer, making a quarter of the world's beer.

Anheuser is keeping its options open, only saying it would evaluate the proposal, and InBev over the weekend urged Anheuser to fully explore its offer before considering any possible alternative deal with Mexico's Modelo (GMODELOC.MX).

Reports have suggested Anheuser is looking at a possible link-up with Mexico's biggest brewer, in which it owns 50.2 percent, to help thwart the InBev bid, but analysts say Modelo is unlikely to seek closer ties.

Analysts also see few other places for the U.S. company to turn, as there no obvious rival bidder for it and Anheuser shareholders including Warren Buffett may see a bid from InBev as attractive after a sluggish five years for the stock.

Analysts say the focus is on how InBev handles the Modelo maneuvering and what impact it may have on the price it pays, with most seeing InBev having to pay $70 a share.

"InBev may be tempted to go over a face-saving additional bid premium of say $5/share," says Trevor Stirling at Bernstein, but added InBev's management and controlling shareholders are so linked to InBev for their personal finances that they will be reluctant to pay more than absolutely necessary.

Around two-thirds of InBev's shares are held by the Interbrew families and AmBev's key three shareholders after the Belgian and Brazilian brewing groups formed InBev in 2004.