Bud brewer reluctant to quench Belgians' thirst for expansion

It seems odd that a company from Belgium, a nation with such a rich brewing history, should consider buying one bottle of Budweiser, let alone the capacity to make more than 150 million hectolitres a year of the pale yellow fizzy stuff.

But if the rumours emanating from at least one City investment bank are true, that is precisely what InBev, the Belgium-based brewer of Beck's and Stella, is planning to do. InBev, the world's second-biggest beer-maker, is weighing up a bid of $45 billion (£22.8 billion) bid for Anheuser Busch, the 150-year-old brewer from St Louis, Missouri, that is arguably even more American than Mom's Apple Pie.

The timing could not be better for InBev. The weak dollar that coaxes Brits over to New York for a spot of shopping is equally beneficial to European companies looking to make acquisitions on the cheap. And the American beer market is as flat as day-old pint - while its share prices have been in the doldrums for years, making Anheuser Busch cheaper still.

InBev is a powerful global player with a long list of well-known brands. Its capacity and ability to slash costs could be the shot in the arm a lumbering giant like Anheuser needs. Anheuser may be number one on its home turf but it does virtually nothing in the rest of the world. In today's beer market, being top in one territory will not do.

The US beer market is weak. Traditional "suds" such as Budweiser and Miller still account for the vast majority of sales. But volumes are so huge and prices so low that margins are virtually non-existent. The wine and spirits markets have long been strengthening in the US, and more recently craft beers - the American equivalent of real ale - have been wooing a new generation of beer drinkers. Craft beer volumes are growing at 12% a year. That's a tiny drop in the US beer sales bucket, but there is a feeling the trend will continue to erode traditional beer volumes.

A tie-up between InBev and Anheuser would create a true powerhouse, strengthening American sales for the Belgians and opening up the rest of the world to Anheuser. It would also seem a far better deal for Anheuser shareholders, who would get a great price for their undervalued paper.

A 7% share-price boost for Anheuser when rumours of a deal surfaced a week ago seems to confirm that investors in the US giant would welcome the deal. So it is not InBev's decision to consider a bid for Anheuser that is odd, but rather that the Busch family, which still runs the brewery, is opposed to such a deal. Indeed, there would appear to be no sense in shunning an approach at $65 a share when your shares have been below$50 for most of the past year.

Anheuser chief executive August A Busch IV and his father August Busch III are more concerned with corporate patriotism and family pride than shareholder value. The company has been in the family since 1852, and is a major cultural institution, as well as a employing 6000 locals in St Louis.

The fear among the family and the workers is that, if Inbev takes over, jobs will be axed by the thousands, and one of the last US industrial giants will be wiped off the map. But Anheuser is a public company, and the family owns nowhere near enough shares to block a deal.

Adolphus Busch, a half-brother of the chief executive, recently expressed the opinion that if a good deal is ever put on the table, it should be considered. Such a rift in the founding family is good news for InBev if it decides to press ahead.