It has finally happened. Anheuser-Busch, the American maker of Budweiser beer, has rejected InBev's $46.3 billion proposal as ''financially inadequate'' but kept the door open for a higher offer or another suitor. Of course, this was not entirely unexpected and also reported earlier. (See: Anheuser-Busch may reject $46.3 billion InBev bid)

Although InBev has adopted a strident tone by announcing plans to go hostile in its bid and rally shareholder support to remove the Anheuser-Busch board of directors, it may not be completely averse to an amicable deal. Sources indicate that it may be willing to even increase its offer by as much as $10 from the current $65 per share.

Anheuser-Busch's board unanimously rejected the InBev's bid to create the world's largest brewer, saying the offer undervalued its assets and its growth plan, including a newly revamped cost-cutting programme. However, it also said it was open to considering any proposal offering full value to its shareholders.

InBev late on Thursday reiterated its preference for a friendly combination but filed a lawsuit to establish that shareholders could remove Anheuser's entire board of directors, in a possible prelude to a more acrimonious campaign.

InBev could not say when it expected the Delaware Chancery Court to rule, but believed it could come relatively soon. St Louis-based Anheuser-Busch is registered in the American state of Delaware.

At the present offer, InBev values Anheuser-Busch at around 10 times Anheuser's 2009 earnings before interest, taxes depreciation and amortization (EBITDA). If it does increase the offer to $75 a share, the valuation would jump to 11.5 times EBITDA. Tellingly, SABMiller, the world's third-largest brewer, paid about 14 times EBITDA for Royal Grolsch NV last year. (See: SABMiller to acquire Dutch beer maker Koninklijke Grolsch)

Some US lawmakers, including both senators from Missouri, have already expressed objections to the deal, arguing it could lead to local job losses. Nationalistic sentiments have also been whipped up over the deal. (See: InBev's bid for Budweiser parent ignites nationalist sentiments in the US)

Belgium-based InBev is seeking control of half of the US beer market and growth in China, where Anheuser-Busch owns 27 per cent of Tsingtao Brewery Co., the country's second- biggest brewer. InBev, the product of a combination between Interbrew SA and Sao Paulo-based Cia. de Bebidas das Americas four years ago, is the biggest beermaker in Latin America.

Some members of the Busch family, which has run Anheuser- Busch over five generations, want the brewer kept independent.

CEO August A Busch IV told InBev before it put a proposal in writing that his company wasn't for sale, and that ''he and his board are 'committed' to remain independent,'' the Belgian brewer said yesterday in a filing in a Wilmington, Delaware, court. InBev asked a court to rule that shareholders can remove all 13 members of Anheuser-Busch's board by written consent at the same time.

If the deal goes through it will be the third-largest foreign takeover of a US company ever, as well as the largest takeover this year.

InBev has been keen to remind shareholders that its offer is 24 per cent higher than the stock's closing price the day before reports that InBev was working on a bid surfaced and 35 per cent above the average share price over the preceding month.

Anheuser-Busch's German shares rose 4 cents to $61.39 at 2:52 p.m. in Frankfurt today. InBev fell 86 cents, or 1.9 per cent, to €44.14 in Brussels.