Anheuser-Busch Jumps on Shake Out Rumors

An article appearing in Tuesday's New York Post set off speculation that William Ackman, general partner of the Pershing Square Capital Management hedge fund, was targeting Anheuser-Busch with an activist shareholder campaign, sending shares higher by 0.96% during regular trading and an additional 0.63% in after hours action to $54, their highest point in three years. The Post reported Ackman raised $2 billion and has possibly already been buying up shares of the company, which the Post hinted at, but didn't mention by name. According to CNBC's David Faber, the hints dropped by the Post point to Anheuser, including references to 'an iconic company.' The Post went on to quote Ackman as saying: "One division has 'to have its value unlocked,' one division is to be sold and one division 'is misunderstood.'" This likely refers to Anheuser's three divisions: beverages, bottling and real estate (mainly theme parks). $55 June, July and September call options have traded many times their normal volume in recent days. Ackman and Pershing Square have gone after brand name companies in the past including, most famously, McDonalds. Other possible targets include Starwood Hotels & Resorts Worldwide, Marriott International and Kraft Foods.

Sources: New York Post, CNBC.com, Bloomberg, Reuters
Commentary: Anheuser-Busch Shares Higher On Ackman Activist Target Speculation • Anheuser-Busch Posts Q1 Profit Miss • Merger Speculation Sends Anheuser-Busch Shares to Two-Year High
Stocks/ETFs to watch: Anheuser-Busch Companies, Inc. (BUD), Starwood (HOT), Marriott (MAR), Kraft (KFT), McDonald's Corp. (MCD). Competitors: Molson Coors Brewing Company (TAP). ETFs: Consumer Staples Select Sector SPDR (XLP), Vanguard Consumer Staples ETF (VDC), PowerShares Dynamic Consumer Staples (PSL)
Conference call transcripts: Anheuser-Busch Q1 2007

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