Bud brewer in a tight spot from Stella bid
InBev has timed its $46.3 billion bid for Budweiser brewer Anheuser-Busch well. Anheuser’s shares have gone nowhere for five years, Chief Executive August Busch IV is not the leader his father was, while InBev is buoyed by strong revenues from Brazil, where the real is riding high.
That probably explains the wall of silence from the Budweiser brewer’s home town of St Louis. What does it do to fight off the $65 a share bid — sack its chief executive, sell
off its non-core assets or look for a friendly white knight?
The Busch family has had influence over the group well beyond its small 3.5 percent stake. But with hard cash on the table, hedge funds moving in and investment guru Warren Buffett sitting on 5 percent, the family no longer pulls all the strings.
It could move to sell off its SeaWorld entertainment parks and its packaging non-core assets for $4 billion, but the Stella Artois and Beck’s Belgian-Brazilian brewer InBev has already said it will do that anyway if its bid is successful.
And finding a friend? Well, SABMiller already owns U.S. No 2 brewer Miller, Diageo doesn’t want a massive gamble on the U.S. economy and beer market, and Heineken simply can not afford it so soon after swallowing half of Scottish and Newcastle.
InBev may well have to pay a few dollars more to win, but with half its earnings coming from Brazil and the real on a roll, it is confident it can get the financing — credit crunch or no credit crunch.
Time for a Bud?
InBev thinks so.