July 12 (Bloomberg) -- InBev NV moved closer to a takeover of Anheuser-Busch Cos. after boosting its offer for the maker of Budweiser by 7.7 percent to $70 a share, a person with knowledge of the talks said.

An acquisition would end 156 years of independence for the St. Louis-based brewer and come after Anheuser-Busch criticized the initial proposal for undervaluing the company. Discussions over the $49.9 billion bid may still fall through, said the person, who asked not to be identified because the negotiations aren't public.

Both companies rose in trading yesterday on optimism that Leuven, Belgium-based InBev would gain control of Bud Light, the top selling brand in the U.S., and become the world's largest brewer by sales volume. Anheuser-Busch, which has gained 26 percent since reports of InBev's planned bid, had proposed cuts of $1 billion and a stock buyback to boost the share price.

``There is going to be a lot of pressure on the board to accept $70,'' Ann Gilpin, an analyst with Morningstar Inc., said in a Bloomberg Radio interview. ``At this point there's really not a lot of obstacles.''

Anheuser-Busch Chief Financial Officer W. Randolph Baker and Nina Devlin, an InBev spokeswoman who works at Brunswick Group LLC, declined to comment.

Anheuser-Busch gained $5.29, or 8.6 percent, to $66.50 yesterday in New York Stock Exchange composite trading. A bid of $70 is 27 percent more than its previous high of $54.97 reached in October 2002. InBev rose 3.05 euros, or 7.4 percent, to 44.50 euros in Brussels.

Warren Buffett

The talks were reported yesterday by the New York Times, which indicated billionaire investor Warren Buffett may support a deal. Buffett, whose Berkshire Hathaway Inc. is Anheuser-Busch's second-largest shareholder, refused to speak with reporters while attending the Allen & Co. conference in Sun Valley, Idaho, this week.

At $70 a share, InBev is offering about 11 times Anheuser's 2009 projected earnings before interest, taxes depreciation and amortization. SABMiller Plc, the world's third-largest brewer, paid about 14 times Ebitda for Royal Grolsch NV, Petercam SA's Kris Kippers said.

``Five dollars more goes a long way in making two enemies reach a middle ground,'' Jack Russo, an analyst with Edward Jones & Co., said yesterday in an interview. ``I thought it would drag on for a while.'' He recommends holding the shares.

InBev, the biggest beer company by sales, would surpass SABMiller Plc as the largest by volume if it bought Anheuser, which made the offer public June 11.

InBev Chief Executive Officer Carlos Brito has said the combined company's more than $36 billion in annual sales and 12 billion gallons of shipments would also allow the negotiation of better terms from suppliers as expenses soar for barley, hops and metal for beer cans.

Financial Advisers

The Belgian company, which makes Stella Artois lager and Bass ale, hired Lazard Ltd., JPMorgan Chase & Co. and Deutsche Bank AG as financial advisers. Anheuser-Busch's advisers include Goldman Sachs Group Inc., Merrill Lynch & Co., Citigroup Inc., and Moelis & Co.

InBev wrote to Anheuser-Busch June 25 and said it paid lenders $50 million to get at least $40 billion in financing commitments for its offer. The Belgian brewer has introduced a $45 billion syndicated loan, Reuters reported yesterday, citing unnamed banking sources.

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

The two brewers brought their fight into court last month, and the new talks might help avert a prolonged legal fight.

Legal Dispute

InBev asked a federal judge earlier this week to decide whether all 13 of Anheuser's directors can be fired at once without cause. The Belgian company said then it will seek such a vote by shareholders of the U.S. beermaker.

InBev, which traces its roots to 1366, took its current form in 2004 when Leuven-based Interbrew SA bought Sao Paulo- based Cia. de Bebidas das Americas, or AmBev, in an $11 billion transaction. A takeover of Anheuser-Busch would be the second-biggest purchase of a U.S. consumer company.

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

``If Anheuser-Busch stood alone, it could only dream about reaching $65 in the short term,'' said Kippers, who recommends investors buy InBev shares.

`Financially Inadequate'

The U.S. brewer spurned the original $46.3 billion proposal from InBev on June 26 as ``financially inadequate,'' and kept 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 St. Louis-based brewer's directors.

The Busch family, who don't own enough stock to block a bid, were split over the initial offer. Andrew D. Busch, an uncle of Anheuser CEO August Busch IV, said on June 21 that he wants the brewer to stay based in St. Louis and continue as a ``strong company.'' Another uncle, Adolphus Busch IV, urged Anheuser's board to accept the InBev proposal.

``Clearer minds kind of prevail, and a lot of people believe that this merger is a fantastic merger for both parties,'' Adolphus Busch IV, great-grandson of Anheuser- Busch's founder, said yesterday in an interview. ``Of course everybody has to do what's best for the shareholders.''

Political Reaction

Anheuser may risk criticism from Missouri politicians and customers who want the company to remain independent, the Times said. Barack Obama, the presumptive Democratic presidential nominee, said this week it would be a ``shame'' if a foreign company purchased Anheuser.

InBev may sell Anheuser-Busch's theme parks, which include Sea World, and its packaging unit to help fund a deal, analysts including Credit Suisse's Carlos Laboy have said.

The International Brotherhood of Teamsters, which represents 7,000 Anheuser-Busch employees, has asked the InBev CEO for a meeting to discuss the offer.

In a July 8 letter to Brito made public yesterday, Jack Cipriani, director of the Teamsters' brewery and soft drink conference, raised questions about InBev's financing and statements that it had no plan to close breweries.

To contact the reporters on this story: Zachary Mider in New York at dstanford2@bloomberg.net; Duane D. Stanford at dstanford2@bloomberg.net

Last Updated: July 12, 2008 00:00 EDT