It's over, folks: Buffett backs Budweiser sale
Posted
Jun 17 2008, 01:30 PM
by
Anthony Mirhaydari
Rating:
In a surprising move, Warren Buffett told the Belgian newspaper De Standard this morning that he supports InBev's $46 billion cash offer for Budweiser brewer Anheuser-Busch. His Berkshire Hathaway owns some 35 million shares, or a 5% stake in the iconic beer maker.
The endorsement comes as a bit of a slap in the face for Anheuser CEO August Busch IV, who was trying to buy some time as indicated in this formal response sent to InBev yesterday. In fact, the Oracle of Omaha was going to grace Mr. Busch with his presence later this week to talk the deal through.
Anheuser-Busch shares rose 1.1% to $61.20 today and are up 34% since mid-March as takeover speculation has grown.
Could Mr. Buffett be positioning himself as the vanguard for a shareholder coup? No doubt many would like to avoid the Yahoo debacle we all just witnessed. And he recently demonstrated his deal closing abilities as a critical part of the Mars acquisition of Wrigley's. Other shareholders will likely be influenced. After all, who wouldn't want to stand shoulder-to-shoulder in a deal with the world's richest man?
The opposition seems decidedly less impressive. Certainly, popular support continues to rally in St. Louis, where the local community is trumpeting its opinion with a chorus of "Hell no, Bud won't go." But in reality, things look bleak. Recent changes to Anheuser's corporate governance policy weaken its anti-takeover defenses. Moreover, the history of August Busch IV doesn’t exactly impart confidence; instead, it reminds me of the blighted past of one George W. Bush.
Speaking of politics, Missouri Governor Roy Blunt, a vehement opponent of the deal, is the wildcard. He has already asked the Federal Trade Commission to review the deal, saying that he is "concerned that this sale would have destabilizing impacts on our nation and state's long-term economic interests."
When it comes down to it, American's just don’t like the idea of foreigners buying our stuff, as Barron's outlined in this excellent piece over the weekend. InBev CEO Carlos Brito was in Washington D.C. today trying to placate some of these feelings. I hope he brought along a few bottles of Beck's and Stella Artois -- he'll need them.
I'll have more on Anheuser's strategic alternatives in a post later this week.
Previous posts:
Will Budweiser become Belgian?
The sinfully bullish case for Anheuser-Busch
(Disclosure: I don't own any shares of the companies mentioned.)
