A-B goes to the mattresses
Like Budweiser poured into a tall glass, reports swirled tonight that the board of directors of Anheuser-Busch Cos. has decided to reject the $46 billion takeover offer made last month by InBev, the Belgian-Brazilian brewing giant.
The online edition of the Wall Street Journal, quoting sources close to A-B’s board, said the St. Louis-based brewer will argue that the $65-a-share bid from InBev undervalues the company.
That could set up a hostile takeover bid with InBev taking its offer directly to A-B shareholders. Or InBev could counter with a higher offer. Anheuser-Busch shares closed at $61.76 Wednesday, though the price has steadily been driven up since InBev’s plans were disclosed a month ago.
The Journal report said A-B will argue that it can boost its stock price on its own, perhaps by selling its Busch Entertainment subsidiary and with a company-wide round of cost cuts. Shares of A-B have been trading around the $50 level for most of the last five years. Anheuser-Busch also could play the patriotism card, inasmuch as it is the last major U.S.-owned brewery.
There were no actual reports of mattresses being dragged into the Pestalozzi Street headquarters, but if InBev goes to the shareholders, things could get ugly for a while. The Busches are known to be proud and stubborn people, and InBev’s Brazilian managers have a reputation as hard-nosed businessmen. On Wednesday, InBev ratcheted up the pressure by announcing it had secured financing for the A-B deal.
Judging from reaction around town, A-B and its board will have local sentiment on their side. But shareholders may not be so sanguine. Most of them stand to make up to a 38 percent or more profit if the InBev deal goes through.
A-B’s vaunted marketing geniuses sold us frogs selling Budweiser and horses and beer bottles playing football. But can they sell their own shareholders on the idea they should stick with Busch family management? Or will cash be the king of the beer war?
Let’s play capitalist: Say you’re holding 10,000 shares of Anheuser-Busch stock you bought for $47. With InBev’s $65 offer, you’re looking at a profit of $18 a share times 10,000 shares, or $180,000. You’ve got a capital gains tax of 15 percent, but $153,000 is a 32.5 percent return on your $470,000 investment.
Or are you loyal to the Busch family and their fine heritage in St. Louis, confident they’ll get the price up where it belongs and pay you increased dividends.
Sell?
Or hold?
Kevin Horrigan is deputy editor of the editorial page. He writes editorials on local, state and national politics and public policy and also contributes a signed column to the Sunday Commentary Page. "The Old Sport" is a former sports columnist for the Post-Dispatch and for 10 years hosted radio talk shows on KMOX and KTRS in St. Louis. He lives in South St. Louis with his wife, Kate, and a dream of one day starting a professional catfish noodling tour. 
Ok, I don’t own 10,000 shares of BUD, but, I am a share holder. I am also an active-duty member of the armed forces of the United States.
A-B means something to me as an American and as a defender of our nation and what it stands for. I go to Busch Gardens with my kids and walk the bridge with all the military hymns, and it just makes me proud to know that there is ONE company out there doing that!
You can say Laissez-Faire and global economy all day long, but, I just cannot see how this takeover is good for America. Sure, I will make some nice coin on the $65 per share, but, it is only temporary. What about the future of America. All I see is more foreign investment, weaker dollars, and more Made in China junk. Can we keep one thing that is as American as apple pie - Budweiser. When all of our industry is gone and all of our products are imported or owned by foreign companies, how will our country continue? Will it be intelligent property or other intangible assets? Hmmm.
What about American lost jobs? What about all the community involvement A-B has? InBev will not support America like that. There is just no way that a foreign management team will want to sponsor small American communities like A-B does.
I would rather the share price go down to $30.00 and continue to drink my American owned and American made Budweiser.
Mr. Brito take your offer somewhere else. This is a matter of American Patriotism and nearly every hard working American is against your offer - go with the popular vote. InBev is not wanted here. You can rest assured sales of Bud will drop in America if InBev takes it over, especially if it is hostile.
Mr. Warren Buffet and the board of Barclays - please choose for your nation and against InBev if you have a choice, not your pocketbook - it is already overfilled.
Mr. Busch IV - stay strong, stay the course, and stay American!!!
Tony - Norfolk, Virginia
I’d love to see a response!
Haven’t held any “BUD” (except in a bottle) for years. Who but a brave or crazy arbitrageur would want it, with a 2.8 Zack’s rating and a 2.41 PEG? Too much downside risk. If I had BUD, it’d be in an IRA, where capital gains taxes mean nothing.
Considering the declining dollar, I’d be out of BUD and into offshore investments. If they want to own us, why shouldn’t we own them and make some money? And yes, there’s flags on my front porch and lapel.
Tony, thanks for your service. I agree completely with your comments in my heart. But, my head tells me with the declining dollar the AB management allowed the stock to remain stagnant too long. With global finances as they are U.S. companies will have to grow and compete or be swallowed by global corporations with offshore tax shelter and Sarbanes/Oxley exemptions. As usual, our government has conflicting policies of bashing corporations with taxes and regulations while, simultaneously, propping them up with corporate welfare schemes.
The directors and executives have a fiduciary obligation to the shareholders, all holders not just Mr Buffet or the institutions holding stock.
The industry is already speculating about Miller and Modelo hooking up.
AB is in a quandry with no easy answers unless their intent is to squeeze another couple of bucks from InBev.
If this becomes hostile then it will be another Daimler/Chrysler debacle.
The european cash will generate all kinds of positive financial events in St Louis, Missouri, and states like Florida and Texas with no state taxes.
Our politicians need to be smart and let the markets play itself out.
Once again, I wonder if all the people whining about the foreign takeover of AB are the same ones driving their FOREIGN cars to Communist China Mart to send their tax rebate checks to Communist China?????
It’s really sad to lose such an iconic and historical American company to a foreign investor. I think it’s time we really starting focusing on keeping American jobs and American companies here in the United States.
I’m a small business owner here in Saint Louis, and the economy nationally is hurting everyone - not this is definitely going to hurt at home. They have a website going I signed up at:
http://www.boycottAB.com
It’s a forum to share your ideas and opinions on the InBev buyout and to encourage people to buy from locally owned & operated businesses’.