Anheuser-Busch (BUD) Next Steps: InBev Threatens Hostile While Quietly Raising Bid

The Anheusuer-Busch (BUD) – InBev mating dance continues to play out as expected. BUD dismissed InBev’s $65/share offer as “inadequate” but left the door open for a higher bid “that would provide full and certain value.” InBev, meanwhile, continues to threaten a hostile tender offer while trying to engage BUD in negotiations by raising the possibility of a higher bid.

Before receiving BUD’s rejection letter on Thursday, InBev filed a lawsuit to confirm that shareholders could remove Anheuser’s entire board of directors without cause. Although many analysts believe InBev could go directly to BUD’s shareholders with a $65/share tender offer and win, a friendly transaction would be a lot faster and easier for both sides. Bloomberg, therefore, rightly suggests that more cash could be on its way:

While InBev said it planned to ask shareholders to fire the Anheuser-Busch board, the brewer of Bass, Stella Artois and Beck’s may boost its bid to $75 a share from $65 to allow InBev to avoid a hostile takeover fight, said Malcolm Polley, president of Stewart Capital Advisors LLC. A transaction at that price would be valued at $53.5 billion.

“Anheuser-Busch has to be willing to let InBev in and to see the books,” Polley, who oversees $1 billion in assets said yesterday in a Bloomberg Television interview from Indiana, Pennsylvania. ‘‘If they can show them how they can get there, then I think $75 is doable.”…

[InBev and BUD aren’t the only ones using the press to send a message. $75! $75!]

Colin Symons, whose Pittsburgh-based Symons Capital Management Inc. manages $325 million in assets, said Anheuser- Busch might accept as little as $67 a share, or $47.8 billion, should it become clear that InBev can successfully lobby shareholders to tender their stock.

A price of $67 “would probably assuage the feelings of everybody,” Symons said this week.

At this point, there’s no reason for InBev to go to $75. But especially in this situation–with BUD already having done a good job of whipping up nationalistic outrage about losing an “American icon”–a friendly deal would be a lot better for both sides. A deal in the $70 range seems plausible. We expect InBev’s bankers will soon convey that message to BUD’s (if they haven’t already).

See Also:
Full BUD-InBev Coverage and Analysis

Anheuser-Busch (BUD) To Reject InBev Offer: No Surprise, Just The Beginning
Anheuser-Busch (BUD) CEO A. Busch IV: Why Does Everyone Think I’m Just An Incompetent Playboy?

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