Biggest cash acquisition ever
InBev has pretty much nailed down its buyout of Anheuser-Busch, a move that will make it by far the biggest brewer in the world, with 17% worldwide market share and 49% US market share. The deal ends up at $52 billion. What's really amazing is that this is an all cash deal, the largest one ever.
While Busch family themselves and Missouri politicians had tried to play on xenophobia and Bud's status as an American icon, they shareholders quickly caved when InBev came up with $5 more per share, along with some guarantees about reserving jobs and brands.. A hostile bid suddenly became friendly.
The previous record holder for a cash deal was Cingular Wireless's $40.8 billion purchase of AT&T Wireless in 2004. Of course, all that is now part of the new AT&T (formerly SBC). The third largest all-cash deal was mining giant Rio Tinto's purchase of Alcan in 2007, for $37 billion.
Some other notes:
- One biog factor in the deal has to be the continuing decline of the dollar against the euro, almost 30% in the past few years.
- Strangely enough, Rolling Rock, which had been owned by InBev, was sold in 2006 to A-B. Now the brand will become part of InBev again. You have to wonder whether it will be sold off once more. (By the way, A-B closed the famous Latrobe, Pa. brewery and moved the brewing operations into its own (Bud-oriented) breweries. But Rolling Rock is still marketed as the "little guy" competitor to Bud and Miller.
- Anheuser-Busch made InBev's inevitable cost-cutting job all the easier by announcing its own preemptive layoffs.
- InBev, which has operations in Cuba, still has to deal with federal regulators on that score. Doubtless some kind of legal restructuring can be arrived at.
- InBev needs to sell off $7 billion in assets in order to cover a bridge loan that is based on a quick turnaround. It is almost certain to sell off Anheuser-Busch's chain of theme parks. The ten US-based parks, including Sea World and Busch Gardens, are thought to be worth around $3 billion. Also possibly on the block are A-B's packaging manufacturing division (around $1.52 billion), which has almost a 25% market share in cans in the US, along with a presence in bottle caps and bottles. Also available is its real estate assets (around $200 million). It looks as if InBev may also have to sell a few of its non-core European beer brands.
- Also on the table are A-B's shares in Mexico's Grupo Modelo, though those may be complicated by restrictions on A-B's ability to sell off those shares without Grupo Modelo's consent. More negotiations are needed.
- InBev already has a global flagship brand, Stella Artois. No doubt Budweiser, which is relatively limited worldwide distribution, will join that brand on shelves across the world.
- A-B also owns 27% of China's leading brewer, Tsingtao. If InBev holds on to it, it gives the firm a big presence in China, a growing beer market.
9:22:23 PM 
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