Beverage Stocks Boosted on InBev, Anheuser Merger Talk

Shares in the world's top brewer, Belgium's InBev, rose 5.6 percent on Thursday on a report in Brazil's Valor Economico that suggested the company could merge with Anheuser-Busch (BUD), traders said.

Other European brewers also rallied on the report. Heineken was up 2.7 percent, Scottish & Newcastle up 1.3 percent, Carlsberg up 1.8 percent, and SABMiller up 2 percent.

"It's to do with the article about InBev and Anheuser-Busch holding merger talks," a trader said.

No one at InBev was immediately available for comment.

The paper cited an unnamed investment banker as saying that a merger between InBev and Anheuser "has big chances of happening one day."

The banker said: "I just don't know if this is possible because there is a hurdle to all this: the people at InBev like to have control, as we saw in the merger between AmBev and Interbrew."

InBev was formed from the 2004 merger of Interbrew and Companhia de Bebidas das Americas.

Another trader said that the report seemed tenuous but could not be discounted.

"What it could do is force the other players in the beverage sector to do deals, similar to what we've seen with tobacco consolidations."

Valor said at the end of 2006 InBev's market cap was $40.3 bln which compared with $37.7 bln for Anheuser

It cited an unnamed source close to InBev's management as saying: "This number is important because it gives InBev the possibility of negotiating a merger with Anheuser in better conditions."