What could Busch takeover mean for Hampton Roads?

From staff and wire reports

Far from St. Louis, a significant part of the Peninsula will be closely watching how the unsolicited takeover attempt of Anheuser-Busch shakes out.

Belgian brewer InBev, whose brands include Beck's and Stella Artois, is offering a big payday to shareholders of Anheuser-Busch Cos. Inc. in a $46 billion bid that would create the world's largest beer company.

But will the acquisition, if it does occur, help or hurt many in the Williamsburg area who work and play at properties carrying the Busch name?

It's too early to tell.

"We're obviously very happy with Anheuser-Busch as a community member, and anything that jeopardized that would be a concern to us," said Richard

Schreiber, president and chief executive officer of the Greater Williamsburg Chamber and Tourism Alliance.

The St. Louis-based beermaker owns a bevy of properties in Williamsburg, including one of its 12 U.S. breweries. That site employs about 870 people and produced 297.6 million gallons of beer and malt liquor in 2006, according to the company Web site.

In its initial takeover announcement, InBev promised to keep all American breweries open and make St. Louis the North American headquarters of the new company.

But it said, without elaboration, it would consider shedding its noncore assets. That could include all or parts of Busch Entertainment Corp., a subsidiary of the parent organization that owns Busch Gardens, Water Country USA and the Kingsmill Resort and Conference Center in Williamsburg.

Busch Entertainment spokesman Kevin Crossett said the two Williamsburg theme parks employ 200 people full time, and the work force swells to 6,400 during peak season. Kingsmill has 490 full-time employees.

Altogether, Busch Entertainment owns 10 theme parks.

Bruce Goodson, chairman of the James City County Board of Supervisors, said he would hate to see the entertainment group spun off. He said the brewery and Busch Gardens are both located in his district and Anheuser-Busch collectively is the county's largest employer and taxpayer.

"They're such a good corporate citizen," Goodson said. "I worry that others would not have the same investment in the community."

Schreiber said Anheuser-Busch, aside from being one of the Peninsula's biggest employers, is involved in a host of community ventures.

"Anything that would affect them negatively would affect all of us negatively," he said.

Even if InBev wants to spin off Busch Entertainment, it may be tough to find buyers, said Craig Hutson, a senior bond analyst at Gimme Credit, a bond research firm. There are only a handful of major theme park operators nationwide with the largest being Six Flags Inc., which has 21 parks.

"The problem with Six Flags is that their financial flexibility to do this sort of deal is pretty terrible right now," Hutson said.

In a conference call Thursday with investment analysts, InBev CEO Carlos Brito laid out the company's rationale for the acquisition. A key part of the strategy is making Busch-brand Budweiser a global brand along the lines of Coca-Cola or Pepsi, Brito said.

InBev would use the Budweiser brand to boost business in European and Asian countries where Budweiser is now a niche player, Brito said.

Politicians and activists are already lining up against the deal, saying it could cost jobs in the United States and send ownership of an iconic American company overseas. Missouri Republican Gov. Matt Blunt said he opposes the deal, and he directed the Missouri Department of Economic Development to see if there was a way to stop it.

Brito said in the conference call that the proposed combination "is in the best interest of all constituents, including both companies' shareholders, employees, consumers, wholesalers, business partners and the consumers they serve." InBev is offering shareholders $65 a share, which represents a premium of 11.4 percent over Wednesday's close of $58.35.

If the deal goes through, it would create a beer-brewing giant and mark just the latest phase of consolidation in an industry facing rising ingredient costs and stale demand in the United States.

"Anheuser-Busch said that its board of directors will evaluate the proposal carefully and in the context of all relevant factors, including Anheuser-Busch's long-term strategic plan," the company said in a statement. "The board will pursue the course of action that is in the best interests of Anheuser-Busch's stockholders."

A spokeswoman said the company would not comment beyond the statement.

InBev was formed in 2004 when Belgium's Interbrew merged with South America's biggest brewer AmBev. Since then, the company has cut jobs in several European countries while its sales were boosted by strong demand in Latin American countries.

Worries about job cuts at Anheuser-Busch could be justified. InBev has a reputation for squeezing costs out of the companies it acquires, said Benj Steinman, editor of the Beer Marketer's Insights trade publication. Because of its size - and control of nearly half the U.S. beer market - Anheuser-Busch could be a ripe target for cost-cutting.

"One theory is that their own cost reductions are winding down in Europe and Asia and around the world, and they need somewhere to sort of implement what they're best at," Steinman said.

Last year, Anheuser-Busch turned a profit of $2.12 billion, up nearly 8 percent from $1.97 billion in 2006. But its core brands of Budweiser and Bud Light continued to lag as sales of craft beers and imports rose.

While the InBev deal looks sweet on paper, it's far from a sure thing. InBev said it plans to pay for the deal with $40 billion in debt, and raising so much capital could be tough as banks tighten their standards during a global credit crunch.

Opposition to the deal is sure to be stiff in St. Louis. SaveAB.com, a Web site that sprung up in opposition to the sale, offers visitors yard signs and bumper stickers to express their distaste for the purchase.

"Like baseball, apple pie and ice cold beer (wrapped in a red, white and blue label), Anheuser-Busch is an American original," the site says.

Virginian-Pilot staff writer Jacob Geiger and The Associated Press contributed to this report.