http://uk.reuters.com/article/partiesNews/idUKN2626684720080626?pageNumb...

By Emily Chasan and Martinne Geller - Analysis

NEW YORK (Reuters) - Belgian-Brazilian InBev NV (INTB.BR: Quote, Profile, Research) may get a warmer welcome in St. Louis if it raises its $46.3 billion takeover offer for iconic U.S. brewer Anheuser-Busch Cos Inc (BUD.N: Quote, Profile, Research) rather than launching a hostile bid.

The maker of Budweiser beer rejected on Thursday the initial $65-per-share offer from InBev, which makes Stella Artois and Beck's, leaving the door open to higher bids and other strategic options.

But the board's rejection came mere hours after InBev filed a lawsuit in Delaware Chancery Court seeking to empower Anheuser shareholders to ax its entire board.

The lawsuit is a sign a fight is brewing, experts say, but a hostile bid could backfire and may not be as successful as a friendly offer at a higher price.

"The writing is on the wall that it may get hostile," said Michael Hefter, a corporate attorney at the Orrick law firm in New York.

InBev's chief executive told Reuters last week it does not plan to raise its $65 per share offer, but if InBev's plan is to take its bid directly to shareholders in a hostile takeover, some say that may not be the best avenue to reach a deal.

"Hostile takeovers are like watching one animal eat another, in slow motion. Not pretty," said Tom Pirko, president of Bevmark LLC, a Santa Barbara, California-based beverage industry consulting firm.

Michael Roberto, a management professor at Rhode Island's Bryant University, said hostile deals are tough, because the buyer risks alienating the employees and the company can become difficult to integrate.

"You might get the company, you might win the battle," he said. "But you might lose the war because you've lost the people."

Also, hostile takeovers, particularly between companies based in different nations, can spark opposition from far- reaching corners.

"I think they (InBev) have woefully underestimated the backlash, both political and patriotic, to a hostile move," said Anthony Sabino, a law professor at St. John's University's Tobin School of Business in New York. "It's America with mom's apple pie, Chevrolet and Bud Light. Going to this level of hostility rather quickly is simply going to strengthen the resistance and harden the spine of Anheuser-Busch and its allies in their home state and Washington D.C."

Some U.S. lawmakers, including both senators from Missouri, have already expressed objections to the deal.

Sabino said he felt a deal might be more easily reached through negotiation and compromise and indeed InBev said in its lawsuit on Thursday that its "strong preference" was for a friendly combination.

But based on the lawsuit, experts said InBev is likely readying plans to convince shareholders to dump Anheuser's 13 directors and nominate its own slate of directors that would support the offer.

Anheuser's shareholder base has likely changed since InBev made its offer and is now populated with merger arbitrageurs who could be receptive to InBev's advances, Sabino said.

To replace the board InBev would have to obtain written consent from shareholders and it is asking the Delaware court to tell it whether it is even possible to remove all 13 directors. If that fails, there are other options, such as a tender offer, under which InBev would try to purchase a majority of the company's shares.

"Consent solicitations are expensive and costly and certainly not without risk that they could lose," Hefter said. "But if they can't replace five of them without showing cause, then they are still going to have an uphill battle in seeing the whole deal through."

(Editing by Andre Grenon)