A-B to Fight for Independence — Or Higher Price?

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Brew blog

A-B expected to present strategic plan.

Can Anheuser-Busch successfully fend off InBev’s unsolicited, $46 billion bid by presenting shareholders with an alternative plan to boost the stock price?

The Wall Street Journal reported yesterday that A-B was poised to reject InBev’s bid and present shareholders with a strategy that would deepen a cost-cutting program, shed assets including theme parks, and possibly include a special dividend.

Notes the St. Louis Post-Dispatch: “Ironically, such cost-cutting and divestitures would mirror moves that analysts say InBev might make if it takes over Anheuser-Busch.”

Will it work? The Post-Dispatch finds some observers are skeptical. From the story:

“Are you kidding me? This is not going to fly,” Morningstar analyst Ann Gilpin said Wednesday evening. “The board didn’t really have a leg to stand on to begin with. … I think shareholders are going to look at (the plan) very skeptically.”

Gilpin said the trouble is that Anheuser-Busch appears to be contemplating a drawn-out restructuring plan, while InBev is holding out the promise of $65 a share in ready cash. Plus, buyers of theme parks will not give a desperate Anheuser-Busch a good price in a slow economy, she added.

Beer industry consultant Joe Thompson, meanwhile, says A-B should fight — and could be better positioned to boost the business. From the story:

Joe Thompson, president of South Carolina consulting firm Independent Beverage Group, said “the best thing to do is for Anheuser-Busch to fight” the takeover. Thompson said he believes the Anheuser-Busch management team is better prepared than InBev to grow the A-B’s core business in the U.S. over the next three to five years.

Another beverage analyst, meanwhile, suggests A-B is trying to push A-B to offer a higher price.

But Tom Pirko, president of Buellton, Calif.-based industry consulting firm Bevmark, believes Anheuser-Busch’s reported plan is actually a bluff to squeeze more money out of InBev.

“Quite candidly, what they’re doing doesn’t even buy them any time,” said Pirko. But Anheuser-Busch’s plan is meant to reset InBev’s offer at a higher level β€” perhaps $70 or even $75, he said.

InBev faces some constraints of its own, Pirko said. InBev chief executive Carlos Brito “has to be very careful” not to damage Anheuser-Busch’s assets β€” including its relationships with distributors, retailers and the general public β€” by going hostile.

Pirko predicted “a real knock-down, drag-out series of discussions” between InBev and Anheuser-Busch on how to value the St. Louis company while avoiding a “disastrous” impasse.

Time will tell.

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