Anheuser-Busch InBev Thread

innov8ion · PostJun 26, 2008#2762008-06-26T22:24+00:00

The Central Scrutinizer wrote:Given that the eventual price will likely exceed $50 billion, and that the 1/2 of Modelo + packaging + theme parks would only bring in $10-$12 billion (using figures I have seen), that leaves roughly $40 billion in debt.

I would hazard to guess that you will not see him re-invest in the combined company. Why? Too much debt.

Competing values are at play. We will see how he weighs them.

The Central Scrutinizer wrote:
innov8ion wrote:
Warren Buffett wrote:
http://blogs.wsj.com/marketbeat/2008/05/03/dollar-talk/

“We are happy to invest in businesses that earn their money in the euro, or in companies that derive their earnings in Germany, or from the sterling in the U.K. because I don’t have a feeling that those currencies are going to depreciate in a big way against the dollar,” he said in response to a question from a German shareholder who asked if Berkshire hedged its foreign-currency exposure. “Overall, I think the U.S. is going to continue to follow the policies that have made the dollar weaker in recent years. I’m willing to bet the dollar will weaken against other currencies over the longer term, so I feel no need to hedge those currencies.”

If you know anything about Buffett, you will know his assets bring big non-dollar revenues. A-B's profits are 86% derived from the USA. Tsk Tsk! The InBev deal will help him gain the global exposure/revenues he seeks and practically guarantees success in the huge-growth Far East market.

To the contrary - his assets are still overwhelmingly US based, as are his reveneues. He didn't invest overseas until his purchase of Iscar, 2 years ago.

They are primarily US-based now, yet they generate large revenues overseas. If he values this sentiment, it will not matter whether the company is US-based or not. The sale of A-B is just another indication that the age of the American Empire is over. This is painful for some, so drink up...

The Central Scrutinizer wrote:
innov8ion wrote:He's a puppet-master and didn't become the world's richest man for nothin'.

Wow, not even close. In fact, I would describe him as the exact opposite of a puppet-master, given his well known hands-off approach to his investments.

I agree he has a hands off approach. But no doubt he moves the strings behind the scenes in regards to the transactions he seeks.

the central scrutinizer · PostJun 27, 2008#2772008-06-27T00:03+00:00

innov8ion wrote:I agree he has a hands off approach. But no doubt he moves the strings behind the scenes in regards to the transactions he seeks.

Not to the extent you might imagine. I will guarantee you that when he bought AB shares 3(?) years ago, it was with the intent to hold them for 20+ years.

innov8ion · PostJun 27, 2008#2782008-06-27T02:32+00:00

^ Do you really know what I imagine? And sure. That's why it's highly likely he'll still own shares in the combined company. He'll hold them for a long time...

the central scrutinizer · PostJun 27, 2008#2792008-06-27T02:38+00:00

innov8ion wrote:^ Do you really know what I imagine? And sure. That's why it's highly likely he'll still own shares in the combined company. He'll hold them for a long time...

Except it is no longer the same company. I bet he doesn't reinvest, with that level of debt.

innov8ion · PostJun 27, 2008#2802008-06-27T19:29+00:00

^ I believe the financed amount was stated to be about 40 billion but then you can subtract the half of Modelo that InBev would likely sell to aid in financing. I'm not sure what that's worth though. Even still, what does Mr. Buffett consider to be the range of a healthy range of debt to equity ratio?

Anyway, it looks like A-B has finally begun a defense that actually involves improving shareholder value! Pretty novel idea, eh. They plan to save $1b in cost-cutting to include 1,300 early retirement buyouts. So who are the evil cost-cutters now?

It's already been stated that this type of activity will only make A-B more desirable to any potential suitors, and rightfully so.

Here's an article about the latest movements: http://triangle.bizjournals.com/triangl ... ily74.html

the central scrutinizer · PostJun 27, 2008#2812008-06-27T20:59+00:00

innov8ion wrote:^ I believe the financed amount was stated to be about 40 billion but then you can subtract the half of Modelo that InBev would likely sell to aid in financing. I'm not sure what that's worth though. Even still, what does Mr. Buffett consider to be the range of a healthy range of debt to equity ratio?

Zero.

I don't know, and he ain't telling.

tb1000 · PostJun 30, 2008#2822008-06-30T19:46+00:00

I think ABIV should step down and find an adequate replacement in order to give the shareholder's some confidence in this plan.

the central scrutinizer · PostJun 30, 2008#2832008-06-30T20:02+00:00

TB1000 wrote:I think ABIV should step down and find an adequate replacement in order to give the shareholder's some confidence in this plan.

This situation lies at the feet of AB III, not IV, who never really had time to make his mark.

matguy70 · PostJul 08, 2008#2842008-07-08T23:25+00:00

AB SUES INBEV

Says Inbev unsolicit bid and takeover stragedies are illegal

http://ap.google.com/article/ALeqM5jK1t ... wD91PU0AG0

http://www.marketwatch.com/news/story/a ... dist=msr_7

jcity · PostJul 09, 2008#2852008-07-09T01:38+00:00

hahaha, I LOVE how they dragged the CUBA thing into this! the fangs are out!

jlblues · PostJul 10, 2008#2862008-07-10T04:21+00:00

Ewwwww, ouch. A-B, Chrysler, Centene/Ballpark Village...just wonderful coverage in today's Wall Street Journal Real Estate Section:

St. Louis: Anheuser Bid Stokes Angst in Slumping Region

There are few fans in St. Louis of InBev NV's $46 billion unsolicited bid for Anheuser-Busch Cos. As the headquarters of Anheuser-Busch, the city stands to lose jobs and prestige if the company becomes a unit of the Belgian brewer.

The bid also comes at a time when the region's real-estate market is feeling the pain from a sputtering economy.

Last week, Chrysler LLC said it would idle its St. Louis South minivan plant indefinitely in October, a blow to warehouse owners that partly count on the auto maker's suppliers as tenants. Meanwhile, the high-profile Ballpark Village multi-use project that was to rise next door to the St. Louis Cardinals baseball team's two-year-old Busch Stadium remains stalled, though developers say an agreement with the city finalizing the public-sector portion of the financing is imminent. The city suffered a setback in March when Centene Corp., a health-care company, opted out of plans to move its headquarters from the city's Clayton suburb into the proposed $650 million project.

Read More

jmedwick · PostJul 10, 2008#2872008-07-10T12:52+00:00

You know, while loosing 2,400 jobs at the Chrysler plant is a blow to the region, I really think it is the best thing in the long run. The further St. Louis and state leaders get from believing that auto production should be a major facet of the local economy, the better of St. Louis will be. With the total number of auto related jobs in St. Louis in decline since the late 1970's, you would think that local and state leaders would understand that the region is no longer competitive in the industry and that throwing millions of dollars of tax incentives at the problem only wastes valuable funds. If the plants close, then hopefully local and state leaders will loose the temptation to throw dollars at the Big Three to keep production in St. Louis. If local and state leaders want St. Louis to have auto production, make Missouri a right to work state, otherwise don't bother.

chrisindowntown · PostJul 10, 2008#2882008-07-10T13:23+00:00

But the big problem is all of the secondary suppliers that are affected by this. These companies don't JUST supply to automotive, but a lot of them do 25% or 50% or 75% of their business with the South plant, and they are not going to be able to to survive this loss. Trust me, many of them have been adapting over the years and taking on non auto customers, but the auto supply industry is tough and it's really hard to expand your offerings into different industries when the plants are so demanding. Many more jobs than just 2400 will be lost. What do they say...5 to 1. And they are not all automotive...

innov8ion · PostJul 10, 2008#2892008-07-10T17:26+00:00

matguy70 wrote:AB SUES INBEV

Says Inbev unsolicit bid and takeover stragedies are illegal

http://ap.google.com/article/ALeqM5jK1t ... wD91PU0AG0

http://www.marketwatch.com/news/story/a ... dist=msr_7

Takeover tragedies are not illegal. In any case, this lawsuit has little merit. If InBev doesn't have the dough, obviously the transaction won't be able to be completed. If the majority of stockholders are interested in pursuing the bid, so be it.

One good thing about the InBev bid is that A-B has finally decided to be more competitive. Good for them, but analysts have suggested the cost-cutting only raised the true value of BUD shares from 52 to 55. That's still less than the standing offer of 65. Looks like A-B has more work to do in improving shareholder value if they want to keep the company.

PostJul 11, 2008#2902008-07-11T17:05+00:00

Ok, it looks like the deal is very likely to occur soon. InBev just raised its offer to $70/share and BUD stock is up nearly 8% on the day to $66 and change. The A-B board is extremely likely to approve the deal in the coming days, especially with pressure from its major shareholders.

There was a lot of fairly easy money to be made in buying BUD since late May. Hope some of you capitalized.

InBev Raises Its Offer for Anheuser

By ANDREW ROSS SORKIN and MICHAEL J. de la MERCED

Published: July 12, 2008

In a reversal of its previous hostility to the idea, Anheuser-Busch is in active talks to sell itself to the Belgian brewer InBev in a friendly deal, people briefed on the matter said.

InBev has raised its offer to $70 a share, more than the $65 it had originally offered, a person close to the talks said on Friday.

An announcement of the deal could come as early as Monday, though people briefed on the talks cautioned that they might still break down.

Shares of InBev were up more than 2 percent in Belgium after The New York Times reported that the companies had entered friendly talks.

In striking an agreement, Anheuser risks a political backlash from the growing number of hometown politicians and customers who had supported the company in its efforts to remain independent.

Helping to drive the deal talks was the indication that some of Anheuser’s largest shareholders, including Warren E. Buffett, were leaning toward backing a deal with InBev.

If a deal is reached, it would end more than a month of hostilities between the two beer giants and create the world’s largest brewer. It would combine Anheuser, the maker of Budweiser and a fixture in American culture, with InBev, the producer of Stella Artois, Beck’s and Bass, creating a new behemoth with distribution channels around the world.

Read more here: http://www.nytimes.com/2008/07/12/busin ... ei=5087%0A

threeonefour · PostJul 11, 2008#2912008-07-11T18:36+00:00

innov8ion wrote:Ok, it looks like the deal is very likely to occur soon.

Yay. Let's all do a happy dance.

innov8ion · PostJul 11, 2008#2922008-07-11T19:22+00:00

ThreeOneFour wrote:
innov8ion wrote:Ok, it looks like the deal is very likely to occur soon.

Yay. Let's all do a happy dance.

I believe many more employees can afford to take an early retirement now. They're probably doing happy dances.

threeonefour · PostJul 11, 2008#2932008-07-11T19:28+00:00

innov8ion wrote:
ThreeOneFour wrote:
innov8ion wrote:Ok, it looks like the deal is very likely to occur soon.

Yay. Let's all do a happy dance.
I believe many more employees can afford to take an early retirement now. They're probably doing happy dances.

Yeah. Never mind what's lost in the process.

matguy70 · PostJul 11, 2008#2942008-07-11T19:32+00:00

We'll have to wait and see.

It is a double edge sword for all most likely.

KMOX just said that a press release said "... that InBev would move its global headquarters to St. Louis " and possible adding employees in St. Louis.

southsidepride · PostJul 11, 2008#2952008-07-11T19:38+00:00

^well if InBev is all about cutting costs the cost of living in St. Louis is considerably cheaper than Belgium--especially considering all the $$ they'll get for those Euros!

downtown_guy · PostJul 11, 2008#2962008-07-11T19:39+00:00

My broker just left me a message saying that the deal will be announced on Monday at $70 per share

jmedwick · PostJul 11, 2008#2972008-07-11T20:13+00:00

Global.... [-o<

innov8ion · PostJul 11, 2008#2982008-07-11T20:20+00:00

JMedwick wrote:Global.... [-o<

Only global?!? And likely adding employees in St. Louis? What an utter loss for us! Boo hoo.... I was hoping for the Intergalactic HQ.

The era of nepotism, complacency and undisciplined business performance will soon be over. Hello merit, a hunger to grow world markets, and accountability. This, in and of itself, is great news!

And I just got the call that I've been accepted into the Professional MBA program at WashU starting the fall. Time to celebrate! (Not celebrating the InBev buyout, but I do think it's good news overall.)

debaliviere · PostJul 11, 2008#2992008-07-11T20:24+00:00

innov8ion wrote:And I just got the call that I've been accepted into the Professional MBA program at WashU starting the fall. Time to celebrate!

Congrats! Enjoy your free time now, while you can.

midcoaststl · PostJul 11, 2008#3002008-07-11T20:24+00:00

^ Congrats

Anheuser-Busch InBev Thread

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