Anheuser-Busch To Cut $1 B In Costs, Improve Profits After Rejecting InBev

New York, NY (AHN) - After rejecting InBev's unsolicited highest takeover bid, Anheuser-Busch Cos. Inc. decided to cut costs, increase savings and improve profits.

The U.S.'s biggest brewer Anheuser-Busch was recently approached to takeover by InBev NV, who offered a record setting $46.3 billion-in-cash deal.

Belgium-based InBev, who is a maker of Stella Artois, Becks and Bass, has proposed to pay $65-a-share in cash for Anheuser-Busch, the maker of Budweiser.

The takeover proposal, if accepted by the maker of Budweiser, would create the world's largest brewer. But it was not pursued by Anheuser-Busch

Anheuser-Busch has a non-controlling half stake in Grupo Modelo and was in the process to merge with the company after it wanted to block InBev's unsolicited takeover offer.

However, it is now official that Anheuser-Busch has rejected InBev's takeover bid.

"InBev's proposal significantly undervalues the unique assets and prospects of Anheuser-Busch," Patrick Stokes, chairman of Anheuser-Busch's board said in a statement.

"The proposal also undervalues the earnings growth actions that the company had already planned, which have significant potential for shareholder value creation."

The latest initiatives is likely to increase its earnings outlook for the year 2008 to the most in six years as projected by the biggest U.S. beermaker.

Anheuser-Busch said it will save costs up to $1 billion, which will be achieved between 2008 and 2010, doubling the firm's previous projection as it expects revenue per barrel to rise by 4 percent in 2008 and 2009.

The St. Louis-based company will also slash its workforce through an early retirement program by up to 15 percent or 1,290 jobs from about 8,600 people employed as a salaried staff.

Its expected operating cash flow is set to increase by around $350 million by 2009 from 2007 and free cash flow would increase by about $500 million by next year.

Shares of Anheuser-Busch gained by rose 1.8 percent or $1.13 to $62.48 in New York Stock Exchange composite trading during afternoon trading session on Friday.