Not surprisingly, things are moving quickly in the brouhaha — er, make that brewhaha — surrounding InBev‘s attempt to buy Anheuser-Busch. Frankly, it’s hard to believe that it’s only been about two weeks since InBev tendered their $65 per share offer. Within hours of the bid, the whining began that we shouldn’t allow such an “American” company to be bought by foreigners, despite the fact that A-B’s own record of ruthless business behavior is legendary. As a result, I have a hard time mustering much sympathy. I just don’t find the jingoistic rhetoric very convincing. I can’t say the idea of a beer company that would be as large as a combined A-B/InBev (InBusch is still my favorite suggested name for the newly merged entity) sounds like a good idea. I certainly don’t think it would do the beer world any favors. It would likely screw up distribution for years, and make it even harder for small breweries to get access to market.
So what’s been happening lately? Last Friday, Anheuser Busch’s board met for the first time to discuss the offer on the table. Their initial response? No comment. Then, after rumors of a merger between A-B and Grupo Modelo (in which Bud owns a 50% non-controlling interest) designed to strengthen A-B’s position went south, Modelo president Carlos Fernandez resigned from the A-B board. Shortly thereafter, rumors surfaced that SABMiller was also in talks with Modelo about a possible merger. And if that wasn’t crazy enough, Modelo also reportedly has met with InBev, too!
Then yesterday, InBev sent a third letter to Anheuser-Busch restating their $65 cash offer and urging A-B to make a decision quickly. Later the same day, the Wall Street Journal reported that the board had quickly met and decided to reject InBev’s offer, surprising no one. The next step for InBev, they said, was to “increase its bid, or take it straight to shareholders.” But that’s not what InBev did. Instead, this morning they filed suit against A-B in Delaware (where they’re incorporated) seeking to remove all thirteen directors on A-B’s board. Essentially signaling that the gloves are off, the takeover bid is definitely turning hostile. Meanwhile, Reuters is reporting that A-B is working on their own plan to boost share value, though they speculate that it’s still won’t be as attractive as the InBev offer.
Curiously, that’s the “official” reason A-B gave in rejecting InBev’s offer; that it undervalued the company (despite the offer being higher than A-B stock has ever been). A-B is claiming that “the InBev proposal fails to be competitive with alternative plans the company has developed in recent months to generate significant top-line and bottom-line growth, which will increase value for the company’s shareholders.” Yeah, right. That and $5 will buy you a decent pint somewhere. They’re obviously trying to convince shareholders not to support InBev’s offer with pie-in-the-sky promises. But if A-B had a plan that could really get the share price up to where the offer is at, wouldn’t they already have done so?
| Whew, that’s a lot of drama. This whole thing reminds me of a Godzilla movie, with the behemoths fighting it out over the city, leaving untold destruction in their wake while we watch helplessly from below on street level and hoping desperately that nothing falls on us. |