Predictably, the corn folks say the mandate has benefited Missourians — to the tune of $285 million this year and more than $2 billion over a decade. Show-Me’s Justin Hauke and David Stokes, however, say those figures omit some very large negatives. Specifically, they say the corn promoters are leaving out the cost to taxpayers, and they’re ignoring the fact that ethanol has a lower energy content than gasoline. Their bottom line is much different:

We find that accounting for these costs significantly impacts the MCMC savings projections and would result in a net loss to Missouri consumers of almost $1 billion during the next decade. If one were to consider the additional impact of the E-10 mandate on higher food prices and CO2 gas emissions, these costs would be even higher.

The ethanol mandates, they conclude, are merely another form of special-interest legislation:

Missouri should adopt energy policies that benefit all Missorians, not just those who happen to be on the winning end of a corporate subsidy.

In a video made for distributors and employees, though, another A-B executive emphasizes that level isn’t good enough. According to a transcript filed with the SEC, David Peacock says:

We cannot accept flat market share. We have to grow our volume more rapidly than the industry and we must grow share. If we grow share, we will deliver a performance above the plan we just presented, a plan that has been widely accepted by Wall Street.

Peacock, who is vice president for marketing, also repeats A-B’s rejection of InBev’s unsolicited $65-a-share buyout offer. He ends by exhorting distributors to “come together and focus on competing in the marketplace every day as aggressively as possible to exceed the plan that we have laid out.”

The written-consent tactic has been been used only seven times since 2001, according to an analysis by FactSet SharkWatch. And its success is by no means a slam dunk, analyst John Laide writes:

None of the campaigns resulted in the actual removal of a company director although two were withdrawn after the company agreed to the acquisition under sweetened terms. With the exception of Barrett Resources, which was acquired by white knight The Williams Cos. Inc., the remaining companies remained independent.

Four of the companies had no poison pill in place when the hostile action began, but all four adopted one as part of their defensive strategy. That may be relevant here, since A-B let its poison pill expire in 2004.

The company was once an active issuer of press releases about trade-show appearances, training programs and the like, but it’s been quiet since February. When I wrote a column about Solar Night in March 2006, I said it “raised more red flags than you’d see at a May Day parade in the old Soviet Union.” At the time, the company’s shares were skyrocketing even though it had yet to disclose any financial information, and it was paying a firm called Wall Street Capital Funding to hype the stock.

Solar Night eventually filed a registration statement in January 2007, disclosing that its liabilities exceeded its assets by $2.6 million.

And its stock? It traded on the Pink Sheets today for a quarter of a penny, down from $3.45 when I raised all those red flags.

So, how does an unsolicited takeover offer affect that profitable relationship? Anheuser-Busch CFO Randolph Baker called it “an obvious concern,” adding:

Obviously our wholesaler family is a bit disturbed by the recent news. We have to keep them focused on our brands and our commitment to the InBev brands. The InBev brands are currently growing by double digits. We are committed to the InBev brands, and this does not change that relationship.

CEO August Busch IV and chief financial officer Randy Baker told analysts they have accelerated cost-cutting efforts, expecting to save $1 billion by 2010, and they’re also stepping up share-buyback plans, advertising spending and beer-price increases.

The bottom line is this: The executives told analysts they can boost earnings per share to $3.14 this year and $3.90 in 2009, and keep them growing at a double-digit pace after that. According to Bloomberg, current analyst estimates averaged $3.02 for this year and $3.30 for next.

At least one analyst congratulated Busch and Baker on the accelerated earnings trajectory. Another asked a pointed question: If InBev hadn’t launched its takeover effort, when would shareholders have learned about all these great things going on?

Busch said executives began boosting their cost-cutting targets last fall, when Miller and Coors announced their U.S. joint venture. He added:

Obviously with the InBev rumors floating around we had to accelerate our timing and our actions. We are absolutely confident that we can execute better than anyone else.

The big question now is this: Would shareholders rather own a company that can earn $3.90 a share in 2009, and keep earnings growing at a healthy pace, or would they rather have $65 a share in cash? Here’s one way to look at that choice: The $65 price is 20.7 times the new earnings estimate for this year, and 16.7 times the new 2009 estimate. During the five years between mid-May 2003 and mid-May of this year, according to Bloomberg, the average price-earnings ratio for A-B’s shares was 19.

So, A-B’s management does have a case to make that its shares are undervalued. But InBev seems very determined to push its $65-a-share offer. I would look for the Belgian company to make its next move within a couple of days.

seeking a judgment to confirm that shareholders acting by written consent may under Delaware law remove without cause all thirteen of the present Anheuser-Busch directors, including the five elected in 2006. Under the Charter of Anheuser-Busch and as a matter of Delaware law, it is clear that the eight directors elected after 2006 are subject to removal without cause through the written consent procedure; the filing seeks to confirm that, as InBev strongly  believes, the directors elected in 2006 are also now subject to removal through that same mechanism.

 The written-consent procedure is a rather obscure provision of corporate bylaws, but it’s a potentially powerful way for InBev to oust A-B’s directors. Sounds like the “friendly” suitor is about ready to take off the gloves.

The next crisis that we will face as Americans will be electricity supply. … The propensity for brownouts and blackouts will increase dramatically when something in the system breaks or when we have very heavy loads.”

The implication, of course, is that we need to burn a lot more of Arch’s coal to meet our needs. Despite opposition from environmentalists, Leer said, “We’re experiencing the biggest coal plant buildout in the US since 1980.”

Leer spoke Friday morning. It’s taken me a while to get these remarks out of my notebook, but his thoughts on the mergers-and-acquisitions climate also are worth passing along.

“We do see this (coal) industry going through another round of consolidation that is just getting started,” Leer said, adding that firms like Arch and Peabody Energy are “minuscule” compared with such diversified mining giants as Rio Tinto and Anglo American. “Given the value of the dollar, the international guys could come in and buy America very cheaply. That is one of our challenges.”

An audience member asked whether Arch might end up on the selling end of a transaction like Inbev’s proposed purchase of Anheuser-Busch. Leer responded:

We work for the shareholders and my glib answer is, we’re for sale every day. As a CEO and board of directors, if somebody comes in and puts an offer on the table that exceeds the share price, you have to think about it. Our goal is, if anybody wants to do that, we want to make it damn expensive.”

Leer also discussed:

• Illinois coal. “We’ll see a resurgence in Illinois in the next five to 10 years,” he said, but cautioned that it takes 5 years of permitting and construction to open a major mine.
• Congress, which he said “doesn’t have a clue” about energy policy.
• China, which passed the U.S. last year in carbon dioxide emissions. “This part of the world is not focused” on global warming, he said. “They’re focused on growing their economies, developing their infrastructure, and staying in power by growing their economies. CO2 is way down the list.”

AES blamed “an inability to successfully raise funds for its ethanol plant construction.” Its shares, quoted on the OTC Bulletin Board, traded for 5 cents apiece Wednesday, down from a high of $2.85 in the fall of 2006.