Anheuser Girds for Fight With InBev – WSJ.com

U.S. Brewer Is Expected to Reject Belgian Company’s Offer, Promise Its Own Plan to Boost Shareholder Value

Anheuser-Busch Cos. is prepared to reject InBev NV’s unsolicited $46.35 billion acquisition offer as early as this week, setting the stage for a hostile takeover battle for America’s largest brewer, according to people familiar with the matter.

Anheuser is expected to argue that InBev’s offer undervalues the maker of Budweiser beer and soon present its own strategic plan. That plan, which is likely to include the sale of noncore assets such as Anheuser’s theme parks, is designed to boost the company’s share price, these people said.

Ultimately, the move isn’t likely to deter InBev, which has put together a carefully crafted battle plan, according to people familiar with the matter. InBev, of Leuven, Belgium, is prepared to take its offer directly to Anheuser shareholders via a tender offer that Anheuser has few defenses to stop, these people said. InBev has yet to decide whether to pursue such a course, however. Many investors have expressed support for the bid, which represents a roughly 30% premium to where Anheuser shares traded before the offer.

Anheuser declined to comment.

Personally, I think this is a good deal for Anheuser-Busch’s shareholders … if I owned shares of NYSE:BUD, I would definitely be voting to approve a merger; not to reject it.

As for the proposed tender offer … participate for the short-term 30% premium? Or continue to hold the shares long-term through the merger?

In the short- and medium-term after the merger is completed, share prices tend to fall more than rise due to the costs of integration, not only of products and systems, but of people … and the fact is that many mergers do end up failing.

So if I were a shareholder, I would vote for the merger, take the tender offer, wait for the share price to fall, and then start buying back in as (and if) the businesses come together. InBev has been incredibly successful internationally; it would be a good thing for the American beer drinker for them to come in and help turn around Anheuser-Busch.

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