Grupo Modelo CEO resigns from Anheuser-Busch board

ST. LOUIS — The head of Mexican beer company Grupo Modelo is stepping down from the board of Anheuser-Busch Cos. Inc. as the remaining directors of the iconic American brewer of Budweiser are considering a $46 billion takeover offer from Belgian brewer InBev.

The resignation of Carlos Fernandez, president and chief executive of Grupo Modelo SAB, was announced Friday — the same day the Anheuser-Busch board met in St. Louis to consider InBev's $65 a share offer for the nation's largest brewer.

Anheuser-Busch said in a statement its board did not respond to InBev's proposal after Friday's meeting but would "continue to review and consider the proposal." InBev declined comment.

Anheuser-Busch shares slipped 38 cents to $60.67 Friday. The stock price has risen sharply since rumors of InBev's interest began earlier this spring.

St. Louis-based Anheuser-Busch did not say why Fernandez resigned. His departure leaves the board with 13 members.

"Carlos has always provided great value as a member of our board, with insights into the business," Anheuser-Busch president and chief executive officer August A. Busch IV said in a statement. "He remains a respected colleague."

Grupo Modelo said in a statement that Fernandez resigned from the Anheuser-Busch board "to avoid the appearance of any conflicts." Company officials did not elaborate.

Anheuser-Busch owns an approximate 50 percent non-controlling stake in Grupo Modelo, and the company distributes Budweiser, Bud Light and other Anheuser-Busch products in Mexico. There have been reports that Anheuser-Busch is considering a greater stake in Grupo Modelo. Still, analysts say the relationship has long been strained.

Juli Niemann of Smith Moore & Co. in St. Louis said Fernandez's departure may be a signal that the Anheuser-Busch board is opposed to the InBev deal.

"What Grupo Modelo wants is a semi-silent partner, and that's not Anheuser-Busch," Niemann said. "The trend may possibly be going in the direction Fernandez doesn't like.

"I view the board meeting as buying time to throw up more defenses — a scorched earth policy or poison pill." A poison pill unleashes more shares in the event that an unwanted suitor tries to take over a company, driving up the purchase price.

Dave Kolpak of Victory Capital Management in Cleveland also believes the majority of board members may be expressing opposition to the InBev takeover.

"My expectation is the Anheuser-Busch board will resist the offer," Kolpak said. "I think it will be a difficult task because I think it's a pretty generous offer. I think the board today is getting together to think about ways to resist."

A deal between Anheuser-Busch and Grupo Modelo could make the St. Louis brewer too big for InBev to purchase. Last week, in a letter to Busch, InBev CEO Carlos Brito warned against pursuing a larger piece of Grupo Modelo. Brito said his company's $65 per share offer was based on Anheuser-Busch's current assets, business and capital structure.

Several Missouri politicians have expressed opposition to the Inbev offer, citing Anheuser-Busch's 150-year heritage in St. Louis and its strong commitment to civic and charitable endeavors.

In a video interview posted Friday on InBev's Web site, Brito tried to calm fears about what will happen in St. Louis if the takeover is approved.

"We don't have a headquarters in the U.S. So why would we move the headquarters out of St. Louis when we understand that St. Louis is such an integral part of what the brand is all about — the roots, the Clydesdales, the museum, the Pestalozzi Street brewery, the 1 Busch Place — all the things are key parts of the brand?" Brito said. "So why change? We don't have a place to go."

In another deal, Anheuser-Busch said Friday it will purchase the remaining 50 percent ownership of the Crown Beers India Ltd. joint venture from its partner, Crown International. The deal also gives Anheuser-Busch ownership of the venture's brewery in Hyderabad, India.

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On the Net:

InBev: http://globalbeerleader.com

Anheuser-Busch: www.anheuser-busch.com