Anheuser-Busch Cos. on Friday mapped out its defense against InBev's increasingly hostile takeover bid, detailing a mix of cost cuts, price hikes and employee buyouts that it hopes will give shareholders renewed faith in the company.

It's a vision of the St. Louis brewing giant that's leaner, more nimble and more aggressive about chasing growth all over the globe — "a new Anheuser-Busch," top executives called it. And, by the numbers, a vision that could be enough to fend off InBev's $47.5 billion advances.

But will it work?

That was the question many industry watchers posed after hearing A-B's plans to wring $1 billion from its budget by the end of 2010. If the plan succeeds, it could drive A-B's stock price beyond the $65 a share InBev is offering. But there is no guarantee.

"A key question, in our view, is Bud's ability to fully execute this plan," wrote Bryan Spillane, an analyst with Banc of America Securities, in a research note on Friday.

And even if A-B can execute, success will take a while.

To stay independent, Anheuser -Busch must convince shareholders to stick with it through the restructuring. And InBev offers cash on the table now. That's tempting.

"It seems to us that shareholders would rather have $65 in cash today"……" wrote Morningstar analyst Ann Gilpin. "The way we see it, a bird in the hand is worth more than two in the bush."

That view is shared by Colin Symons, chief investment officer with Symons Capital Management in Pittsburgh, which owns about 109,000 A-B shares. He'd be "perfectly happy" with $65, and thinks InBev will be better at cutting costs than the current bosses at One Busch Place.

"I think A-B genuinely doesn't want to get bought," he said. "But I don't think they have much say."

Perhaps not. But Friday morning, the company said it's ready to fight.

A-B'S PLAN

The $65 offer "clearly undervalues" Anheuser-Busch, its "iconic" Budweiser brand and its dominant position in the profitable U.S. beer market, said Chief Executive August Busch IV. And, he said, InBev's offer is nothing A-B can't reach on its own.

To get there, Anheuser-Busch will expand and accelerate an existing cost-cutting plan it calls "Blue Ocean." What was to be $500 million in cuts in four years will now be $1 billion, most of it by the end of 2009.

The brewer will hold a tighter rein on the cost of production and supplies and make better use of energy and materials. It plans to squeeze $700 million out of the cost of making beer despite surging fuel and commodity prices.

It also will cut jobs, up to 1,300 this year.

Later this summer, A-B plans to offer voluntary retirement packages to salaried employees ages 55 and up. Between those packages and attrition, it hopes to cut between 860 and 1,300 jobs and save more than $160 million in wages a year. The rest of the savings will come from trimming administrative budgets.

The company plans to drive up the price of its stock by buying more back, $7 billion through 2009 instead of the originally planned $3.8 billion. It will charge more for beer, too, planning to raise prices on most of its brands this fall in a bid to boost revenue by 4 percent on each barrel of beer sold.

Then there's global growth. Busch touted the company's partnerships in China, India and Mexico, and said it will continue to look for opportunities to expand overseas.

"International beer will continue to make significant contributions to A-B's profit growth," said Chief Financial Officer W. Randolph Baker.

GRUPO MODELO

In recent days there had been speculation about more dramatic changes. But those appear to be off the table for now.

There was no discussion Friday of a bid to buy out Grupo Modelo, the Mexican brewer in which A-B owns a 50 percent stake.

That might make A-B too big for InBev to swallow, but the idea has met opposition from Modelo's owners.

Also, there are no plans to reduce A-B's massive marketing budget or to sell off its entertainment or packaging divisions. The Busch Gardens theme parks and A-B's packaging facilities are good strategic investments, Baker said, and profitable.

"There's no financial case for selling those two," he said. "The value implied in our plan is better than we'd get from selling them."

All told, by the end of 2009, the plan will boost the brewer's earnings per share by nearly 25 percent, to $3.90, the company projects. At that rate, A-B's stock could be trading around $68 a share, according to Spillane, or $3 more than InBev's offer.

But not, perhaps, more than InBev is willing to pay.

WILL INBEV RAISE BID?

Some analysts suggested that A-B's response was a bid to draw a more lucrative offer out of InBev, perhaps $70 a share. Maybe $75.

Busch and Baker were coy about that. When asked, they said the board will consider any offer that "builds shareholder value," but refused to discuss specifics.

"We're not putting a price on the company," Baker said. "We are outlining a case for you today on what our strategic plan can deliver."

InBev had no response Friday; it is "considering A-B's reaction," a spokeswoman said. On Thursday, InBev said it "remains committed" to its offer and called for "constructive dialogue" with the A-B board. InBev also filed a lawsuit in Delaware, where A-B is incorporated, seeking to allow shareholders to oust members of the board at any time — a sign that its patience may be wearing thin.

On Friday, Busch said his company will fight that lawsuit. However, he and his team have a lot of fight on their hands right now as they try to fend off InBev and win the support of shareholders after a long period of sluggish growth before the Belgians' bid.

The battle plan Busch laid out Friday focuses on things he can control, he said: cost-cutting, share buy-backs, beer prices. And it's a realistic one.

"We're not going to go and put a number out there we can't meet," he said.

But what Busch can't control is probably the most important factor: the patience, and faith, of shareholders who have a choice between cash now and the hope of cash later.

tlogan@post-dispatch.com | 314-340-8291

jmcwilliams@post-dispatch.com | 314-340-8372