Anheuser Busch Discount to InBev Deal

Budweiser (BUD) continues to trade at a big discount to the $70 all cash acquisition price from InBev. On Thursday InBev (INBVF.PK) affirmed that the deal is on track.

I hear from my investment banking experts that the deal is fully funded. However, the arbitrageurs who would normally be bidding up BUD on the 7.3% discount to the deal price are not getting the funding to play the game. The prime brokers simply are not letting any of their liquidity hoard out of their hands as hedge funds continue to blow up.

It is just another sign of the times.

Disclosure: None

Comments

[Elaine:]

I'd stay away from Budweiser stock at any price. Perhaps it's just me, but when I used to own it a few years back it never did anything for me. It seemed like a good deal on low PE but the earnings continued declining accordingly. I am glad I sold it when I did.

2008 Nov 09 08:27 AM

[User 283977:]

For Elaine... Budweiser closed at $65.69 on Friday. InBev's acquisition price for Budweiser is $70 per share. Scott heard that the deal is fully funded, so their is little risk of the acquisition not going through. So for every 100 shares of Bud purchased at $65.69, you make $431. Thanks Scott!!

2008 Nov 09 12:52 PM

[Dan Weiss:]

The issue is still EU approval as it has not cleared as of yet although its doubtful it will be held up.

2008 Nov 09 08:04 PM

[Pessimistic...:]

I am surprised a major sell off would not be in store. Then again, maybe it is. Sell it down to $35 and then double it up. It seeems that would be a real profitable way to capitalize ( literally) on the deal with InBev.

2008 Nov 09 09:58 PM

[can-man:]

What will the United States Department of Justice have to say about how brito is already running the company and they are both sharing info?ie A/B and inbev. I believe this is unlawful.

2008 Nov 10 09:29 AM

[Burt:]

I am shocked by the ignorance of some of these readers. Elaine, Budweiser is in the middle of an acquisition which would pay Bud shareholders $70 per share. Your comments are therefore meaningless. Pessimistic, the only chance this stock has to go to 35 is if Inbev says the merger is off. It is amazing how little understanding Main St has of the stock market. So quick to point fingers over this financial mess when in reality they helped kick off this whole disaster with the mortgage meltdown. It's probably these same people who took on adjustable mortgages and then realized 5 years later after the rate increase 2 fold that they can't actually afford their house anymore. You can blame Wall St all you want but if you want to see who's just as responsible for this mess, please look in the mirror.

2008 Nov 11 09:15 AM

[User 296523:]

This deal is very dangerous. If Inbev had the financing they would say so. Deals are blowing up and terms are getting changed everywhere. Inbev will probably not back away from the deal. This discount you are observing is the chance that the street is pricing a change in the deal.

2008 Nov 12 09:03 AM

[User 283977:]

My Bud shares paid out at $70 per share today. A lovely profit... Thank you very much Scott!


On Nov 09 12:52 PM Bob Lunn wrote:

> For Elaine... Budweiser closed at $65.69 on Friday. InBev's acquisition
> price for Budweiser is $70 per share. Scott heard that the deal is
> fully funded, so their is little risk of the acquisition not going
> through. So for every 100 shares of Bud purchased at $65.69, you
> make $431. Thanks Scott!!

2008 Nov 18 12:28 PM