So you have heard all of the reasons why InBev NV's proposed $46 billion bid for Anheuser-Busch Cos. might not pan out, but Erin Smith, an analyst of Argus Research Co. says the deal could benefit both brewers in the long run.
"I think for Anheuser-Busch it might be good to merge with them. Right now they are limited in the marketplace, and their core domestic brands have been underperforming in the U.S.," Smith said. The underperformance is in imports and craft beers, limited products with consumer appeal. And while exports are good in China, Anheuser-Busch has limited exports to Europe and many other parts of the world. Smith said that with a merger, InBev could help the company expand to new areas and increase sales.
The Busch family, which has owned Anheuser-Busch for five generations,
may not be willing to give it up, and the company is an
American icon and staple. However Smith believes that the family may be willing to sell for $45 billion, depending upon the terms, but would probably not take less that that amount.
Also, Anheuser-Busch owns 50% of Groupo Modelo SAB. In the event of a merger, the privately held Mexican brewer
could buy back its stake. Smith said that could turn out to be a good thing for Anheuser-Busch. "I'm not sure that Modelo pulling out would hinder a sale because recently Modelo has not been doing as well and contributing less to Anheuser-Busch's overall earnings than in prior years," she said.
- Maria Woehr
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