InBev closes BUD deal; others not so lucky

November 18, 2008

InBev NV successfully closed its $52 billion acquisition of Budweiser brewer Anheuser-Busch, but other suitors have not been so lucky.

InBev managed to close the deal after the banks fulfilled the funding, giving it a $45 billion loan and a $9.8 billion loan bridging to an equity issue that the company plans to launch before the end of the year. 

The company, which became the world’s largest brewer, will be renamed Anheuser-Busch InBev and boast brands ranging from Budweiser, Beck’s, Michelob and Stella Artois.

The deal closed despite several obstacles along the way. InBev’s unsolicited offer initially faced a political and union backlash against the foreign takeover of an American icon, and endured arbitration proceedings by Anheuser-Busch partner Grupo Modelo.

Other deals have suffered a more dismal fate, with each day seeming to spark another busted deal.

On Tuesday, chipmakers ON Semiconductor and Microchip Technology dropped their $2.3 billion unsolicited bid for Atmel Corp. Microchip, however, said it may look at other options for acquiring Atmel. 

Late Monday, ire ore pellet maker Cliffs Natural Resources ended its plan to acquire coal miner Alpha Natural and agreed to pay $70 million to settle litigation. Meanwhile, Chip equipment maker Applied Materials and private equity firm Francisco Partners on Friday said they have walked away from an approach to buy key units of Dutch rival ASM International.

The rate of failed deals has hit a record high level amid a lack of available credit, volatile equity markets and concerns about the global economic crisis. One-third of the U.S. deals announced in 2008 have been withdrawn or failed to closed, according to data from UBS AG.

Now that InBev-BUD has closed, the other mega-deal left over from the pre-doom days of global financial crisis is the takeover of Canadian telecommunications company BCE Inc. That deal is expected to close Dec 11.

Toronto-Dominion Bank, one of the banks funding the BCE deal, last week said it remained committed to funding the transaction.  TD Securities, a unit of TD Bank, is among the banks that have agreed to finance the deal alongside Citigroup, Deutsche Bank and Royal Bank of Scotland.

“We’re…old fashioned,” Toronto-Dominion Chief Executive Ed Clark said at the Reuters Global Finance Summit.  “When we say ‘We’re going to do a deal,’ we say, ‘We’ll do a deal.’ You can’t say, ‘Well it was a good idea at the time, but I don’t like it anymore’.”

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