Hostile bid for Anheuser-Busch could get ugly

By Emily Chasan and Martinne Geller - Analysis

NEW YORK (Reuters) - Belgian-Brazilian InBev NV INTB.BR may get a warmer welcome in St. Louis if it raises its $46.3 billion takeover offer for iconic U.S. brewer Anheuser-Busch Cos Inc (BUD.N) rather than launching a hostile bid.

The maker of Budweiser beer rejected on Thursday the initial $65-per-share offer from InBev, which makes Stella Artois and Beck's, leaving the door open to higher bids and other strategic options.

But the board's rejection came mere hours after InBev filed a lawsuit in Delaware Chancery Court seeking to empower Anheuser shareholders to ax its entire board.

The lawsuit is a sign a fight is brewing, experts say, but a hostile bid could backfire and may not be as successful as a friendly offer at a higher price.

"The writing is on the wall that it may get hostile," said Michael Hefter, a corporate attorney at the Orrick law firm in New York.

InBev's chief executive told Reuters last week it does not plan to raise its $65 per share offer, but if InBev's plan is to take its bid directly to shareholders in a hostile takeover, some say that may not be the best avenue to reach a deal.

"Hostile takeovers are like watching one animal eat another, in slow motion. Not pretty," said Tom Pirko, president of Bevmark LLC, a Santa Barbara, California-based beverage industry consulting firm.

Michael Roberto, a management professor at Rhode Island's Bryant University, said hostile deals are tough, because the buyer risks alienating the employees and the company can become difficult to integrate.