July 14 (Bloomberg) -- InBev NV agreed to buy Anheuser- Busch Cos. in a $52 billion transaction that will make the Belgian company the top brewer in the world's five biggest beer markets.

The $70-a-share purchase announced today will give Leuven, Belgium-based InBev the biggest share in China, the U.S., Russia, Brazil and Germany, making it the world's largest brewer with the size to negotiate lower prices on everything from hops to electricity. InBev gains Anheuser's half share of the U.S. market, the industry's largest, as well as top-selling Bud Light and Budweiser.

``This is really the only vehicle for them to enter into the U.S.,'' Trevor Stirling, an analyst at Sanford C. Bernstein & Co. in London, said in a Bloomberg Television interview. ``This seems to be a deal that's good for both sides.''

The combined company will exceed $36 billion in annual revenue, 85 percent more than InBev's 2007 sales. The transaction follows SABMiller Plc's agreement to combine its U.S. businesses with Molson Coors Brewing Co. as U.S. industry sales approach $100 billion, according to Euromonitor Plc.

InBev will surpass SABMiller as the world's top seller of alcoholic beverages with about 17 percent of the 174 billion- liter market after the purchase is completed later this year.

``This is about giving InBev a U.S. presence and this is the most effective way they can see to achieve that,'' said Grant Saligari, a beverage industry analyst at Commonwealth Securities Ltd. in Sydney. ``Consumers are very emotionally attached to their beers. A peaceful deal helps maintain that.''

InBev Chief Executive Officer Carlos Brito will become the combined company's CEO, and Anheuser-Busch CEO August A. Busch IV and another current or former director of the U.S. company will join the board.

Busch's Role

Busch's board seat is ``a non-executive job,'' Brito said during a call with journalists today. Executive roles for any Anheuser-Busch managers have yet to be determined, he said.

St. Louis-based Anheuser-Busch gained 37 cents to $66.87 at 4:15 p.m. in New York Stock Exchange composite trading, 27 percent higher than when reports of possible bid surfaced in May. InBev declined 1.5 euros, or 3.4 percent, to 43 euros in Brussels trading.

The agreement ends a month of court fights and public quarreling as InBev tried to acquire the U.S. beermaker in a hostile takeover. InBev lifted its initial offer by 7.7 percent and agreed to rename itself Anheuser-Busch InBev, the brewers said today.

The transaction, the biggest cash takeover on record, was helped by the dollar's 13 percent decline against the euro in the past year.

Dollar, Euro

``The world we live in, where we have the free flow of capital and the dollar's weakness against the euro, it makes it tons easier for them to make this purchase,'' said Donald Yacktman, president of Yacktman Asset Management Co. in Austin, Texas.

To help arrange the agreement, InBev hired Lazard Ltd., JPMorgan Chase & Co., Deutsche Bank AG and BNP Paribas SA and Centerview Partners LLP. The deal will rank second among U.S. consumer-products acquisitions, behind Procter & Gamble Co.'s purchase of Gillette Co. for $57 billion in 2005.

Anheuser-Busch's financial advisers include Goldman Sachs Group Inc., Citigroup Inc., and Moelis & Co.

``You really couldn't have wished for a much better deal,'' said Tom Pirko, president of Bevmark LLC, a consulting firm in Buellton, California. ``Shareholders thought it would be a hostile bid and the company would be wrecked.'' Pirko's firm has analyzed the beverage industry for 30 years.

Grupo Modelo

Grupo Modelo SAB, the Mexican brewer that's half owned by Anheuser-Busch, said in a separate statement that it hasn't yet decided whether it will stay with InBev after the sale is completed. Modelo said it has a right under Mexican law to decide on its partner and has been in talks with InBev.

Brito said today on the call that there's no deadline for a decision.

Anheuser-Busch must pay InBev $1.25 billion if the U.S. brewer accepts a superior proposal, said Nina Devlin, an outside InBev spokeswoman at Brunswick Group LLC, in an e-mail.

At $70 a share, InBev is paying about 11 times Anheuser's 2009 projected earnings before interest, taxes, depreciation and amortization, based on analysts' estimates compiled by Bloomberg. SABMiller paid about 14 times Ebitda for Royal Grolsch NV, according to Petercam SA's Kris Kippers.

InBev, the maker of Stella Artois and Leffe Belgian ales, said the purchase will be ``neutral'' to 2009 earnings per share and should boost EPS from the following year. The company expects cost savings of $1.5 billion annually by 2010, and it will keep all of Anheuser's U.S. breweries open.

Cultural Mix

``In InBev already today, there's a mix of a lot of geography and cultures, so why would adding a North American operation not work?'' said Wim Hoste, a Brussels-based KBC Securities analyst, in a Bloomberg Television interview.

Billionaire investor Warren Buffett's Berkshire Hathaway Inc. is Anheuser-Busch's second-largest shareholder, with a 5 percent stake. Barclays Plc owned 6.1 percent of the U.S. brewer as of March 31, according to data compiled by Bloomberg. Buffett didn't immediately respond to a request for comment.

InBev's Brito said the combined company's 12 billion gallons of shipments will allow the negotiation of better terms from suppliers as expenses soar for barley, hops, electricity and metal for beer cans.

``Now with Budweiser as our global flagship brand, that'll give us a great platform to develop that brand together with Beck's and Stella Artois,'' Brito said today in an interview broadcast on the Cantos Web site.

Cost Reductions

InBev may have trouble lowering costs given potential resistance from Anheuser-Busch's unions and the low market overlap between the two companies, according to Wachovia Securities Inc. analyst Jonathan Feeney.

InBev will finance the transaction with $45 billion of debt, including $7 billion of bridge financing for divestitures of ``non-core'' assets from both companies. The brewer said it also received commitments for as much as $9.8 billion in bridge financing to provide it with flexibility on the timing of a stock sale after the purchase.

InBev's lenders are Banco Santander SA, Deutsche Bank, Barclays Plc, JPMorgan Chase, Royal Bank of Scotland Group Plc, BNP Paribas, Fortis, ING Groep NV, Bank of Tokyo-Mitsubishi UFJ and Mizuho Corporate Bank Ltd.

Sullivan & Cromwell LLP, Clifford Chance LLP and Linklaters LLP provided legal advice for InBev. Skadden, Arps, Slate, Meagher & Flom LLP advised Anheuser-Busch, while Simpson Thacher & Bartlett LLP advised the brewer's board.

InBev Growth

InBev, which traces its roots to 1366, took its current form in 2004, when Interbrew SA bought Sao Paulo's Cia. de Bebidas das Americas, or AmBev, in an $11 billion acquisition.

Through 20 years of acquisitions, InBev expanded from family-owned Flemish beers to surpass Anheuser-Busch in sales while dominating Latin America.

The Belgian company will get control of half the U.S. beer market and will grow in China, where Anheuser owns 27 percent of Tsingtao Brewery Co., the country's second-largest brewer.

The U.S. brewer spurned InBev's original $46.3 billion proposal on June 26 as ``financially inadequate,'' while keeping the door open for a higher offer from InBev or another suitor. That rejection came three hours after InBev made its bid hostile and announced plans to fire the brewer's directors.

The Busch family, which doesn't own enough stock to block a bid, was split over the initial offer. August Busch IV said earlier this year that the company wouldn't be sold ``under my watch,'' while an uncle, Adolphus Busch IV, urged Anheuser's board to accept the InBev proposal.

To contact the reporters on this story: Duane D. Stanford at dstanford2@bloomberg.net

Last Updated: July 14, 2008 16:22 EDT