Friday, July 11, 2008

A Friendly Deal for Bud?

The Wall Street Journal reports this morning that Inbev may be raising its bid from $65 per share to $70 per share in an effort to secure a friendly deal with Anheuser Busch. It's not surprising to see Inbev up its offer, given that a friendly deal likely means a smoother integration process than a hostile takeover. Achieving key synergies becomes crucial to justify the takeover premium, and those synergies require the cooperation of Anheuser-Busch managers and employees. Most experts believe Anheuser-Busch would have a hard time devising a strategic plan that would allow it to argue to shareholders that it can get to $70 per share on its own, even if it sells noncore assets such as the theme parks and packaging business. It will be interesting to see if the two firms can hammer out a friendly deal. Moreover, it will be interesting to see how analysts and investors react to the larger takeover premium being offered by Inbev. Will they think that the potential synergies justify that acquisition price?