For those of you who have been following this blog, you know where I stand on Inbev’s bid for Anheuser Busch (see Ambush by Inbev?). Basically, my view is that although there are many reasons the two firms belong together, I would be surprised if the deal were to go through. It just seems to me that there are too many interested parties running interference.
My view hasn’t since changed, and it looks like Anheuser Busch will now make its first in a predictable (and myopic) set of moves by officially rejecting Inbev’s offer (see Anheuser Busch Plan Unlikely to Please Investors). Reuters is reporting that Anheuser Busch will instead offer it’s own plan to raise shareholder value that includes divesting non-core assets such as the theme-park business.
So assuming AB rebuffs Inbev (which looks likely), where do we go from here? The most likely scenario is that Inbev takes its case straight to the shareholders (another blunder) and turns this into a hostile affair.
Why would that be a blunder you ask? Because if you thought Anheuser Busch didn’t want this deal to go down, just wait until the politicians (and the mal-informed, misguided American public) get into the game and cry foul. All that will do for Inbev is raise its costs with little change in the end result – a failed bid for Bud.
At this point, if Inbev (and it’s bankers) were thinking about the best interests of its own shareholders, they would abandon the bid and move on. This is a no-win battle.
And even if by some miracle Inbev does win the fight, it still loses the war. If Inbev is able to wrestle Anheuser Busch away from AB’s shareholders, in the end the additional expense incurred during the bidding process, coupled with the many concessions Inbev would be forced to make as the owner of AB, will condemn their union to years and years of sub-par returns.
For Inbev then, the best response is probably just to walk away now.