“The good Lord was sold out for 30 pieces of silver. We were sold out for $70 a share.”

- Dave Liszewski, longtime Anheuser-Busch (BUD) employee

What to make of the Budweiser buyout, now that the Anheuser-Busch family has accepted Inbev’s sweetened $52 billion offer?

In St. Louis, the home of Bud since 1876, the reaction is deeply personal. There is great concern that the city’s health and well-being will be affected by the new owner’s cost-cutting. Plants could be shut down… jobs lost… local outreach programs and long-standing traditions gone.

Opal Henderson, a 78-year-old salvage yard owner, asks the question on many Arch City residents’ minds: “Why can’t those foreigners just stay at home and leave us what we have?”

Henderson channels the broader reaction of Bud drinkers everywhere. From a certain point of view, we are all from St. Louis on this. How could something so local, so basic, so fundamentally American, wind up in the hands of those frou-frou Europeans?

Older Than You Think

But from another point of view the ranting is overdone, and a bit hypocritical to boot. There is a certain irony in Bud going back to Europe, for example, because that’s where it came from in the first place.

The name “Budweiser,” known as Budweis to the Germans, goes all the way back to a little Czech town called Ceske Budovice. Beer has been brewed there for more than 740 years — ever since the middle ages — and has been casually referred to as Budweiser for most of that time. (In the Czech Republic, it’s normal practice for beer to be referred to by town or region of origin.)

So as you can see, the Budweiser name has a little bit of age to it. When the American version came into existence in 1876 — roughly six centuries after the Czechs got it going — the new brewers had the good sense to pay homage to the old. (Having studied in the Czech Republic in the mid-‘90s, I can furthermore assure you — eight centuries of practice have paid off. The Czechs truly know how to make the best beer in the world. For a poor college student, it tasted even better at 50 cents a glass.)

Just Business

I asked Sara Nunnally, our globetrotting foreign markets expert, what she thought of the deal from an international perspective. How does this thing look from Belgium (where Inbev, the acquirer, is based)?

“Well, you know, Justice,” Sara replied, “$52 billion just ain’t as much as it used to be. You’ve heard the news about the dollar hitting a record low against the euro, right? So that $52 billion is now only 32.5 billion euros. Just last year, this deal would have cost InBev 37.7 billion euros.”

Taking advantage of a strong euro made sense. But what else? I asked Sara why she thought Inbev wanted Anheuser-Busch so badly.

“My honest opinion?” she replied again. “InBev doesn’t care as much about Bud as it does about marketing its own signature beers here in the U.S. Not to mention the ‘back door’ into Asian markets with Anheuser-Busch’s stake in Chinese brewer Tsingtao. And even though InBev has already made inroads in Latin American markets, Busch’s stake in Grupo Modelo, makers of Corona and Modelo beers, certainly makes up a big part of those synergies the suits have been talking about.”

Ah, yes. So it’s all about profits and market expansion… using Bud’s massive U.S. distribution network to get more upscale European beers into the hands of pretentious American drinkers. And maybe about using the economies of scale that come from being the biggest brewer in the world. (A combined Anheuser/Inbev would take that crown; it currently rests with SABMiller in London.)

That all made perfect sense to me, being one of those pretentious upscale types myself. I’ll take a Pilsner Urquel or a Stella Artois over the rest of the pack any day. Not for the label, you see, but for the taste. (I’ll stop there before the pro-Bud hate mail starts rolling in…)

Iwrin Greenstien in Taipan Daily says BUD failed to fend off the bid because it ignored emerging markets.

Whatever the reason for BUD falling into foreign hands, the deal is a steal at $52 billion, says Taipan Daily’s Sara Nunnally. And just in time for the Biejing Olympics it makes InBev China’s number one brewer thanks to BUD’s 27 percent stake in Tsingtao.

Thanks to the dollar’s fresh demise (new lows against the euro), InBev is spending only 32.5 billion euros. A year ago that price tag would have been 37.7 billion euros, and that’s the main reason why InBev can afford to buy BUD now.

Politicians are pouting and throwing tantrums of course, but InBev is not going to let America’s beloved brew go down the tubes. Rather, they’re going to try and sell more Stella. But here’s why I think InBev was so keen on picking up a six-pack of BUD: a 27% stake in Tsingtao.

One word, three sylables, five rings: Olympics.

And who are the three official beer sponsors for the Beijing Olympics? BUD, Tsingtao, and Beijing Yanjing Brewery.

With this takeover, InBev leapfrogs itself to the top position of the largest brewer in China.

By the way, BUD also has a 50% stake in Grupo Modelo, makers of Corona and Modelo beers, and was just about to close on a deal to buy the remaining 50% of the brewery when InBev first initiated its hostile takeover. InBev has already made inroads in Latin American markets, but the Grupo Modelo snag certainly makes up a big part of those synergies the suits have been talking about.

So what’s the deal with BUD’s share price? With a takeover bid with a $4 share price premium, BUD stock should be on cloud nine. BUD was scorching hot right after the announcement of a possible takeover, but now seems to be topping out. To be honest, it never reached the frenzy most premium takeovers have. Not once has it breached the $70 mark, the price per share that InBev offered.

If you ask me, BUD is in for a short-term drop while the details of this acquisition are hammered out.

Source: The BUD Deal: No Use Crying Over Spilled Beer

On Sunday Anheuser-Busch (BUD) accepted a $49.9 billion takeover bid from Belgian-based InBev (INB). This consolidation in the market has sent brewery stocks rallying while US benchmark indexes tumble.

If the takeover goes through, Ian Davis  in The Growth Stock Wire says InBev will be the undisputed leader in the global market. This is not only a safe option during an economic downturn, but it’s also a great way of investing in emerging markets…

I’ll start today’s column with an incredible statistic… 48.

Forty-eight is how many out of every 100 domestic beers sold in America are made by Anheuser-Busch (NYSE:BUD).

This is why, along with companies like Nike (NYSE:NKE), Coca-Cola (NYSE:KO), and Harley-Davidson (NYSE:HOG), Anheuser-Busch is one of the most valuable brands ever created… And it’s why a Belgian brewery will most likely be the proud owner of the company.

On Friday, InBev (EBR:INB) – which makes Stella Artois and Beck’s – got a little closer to acquiring Anheuser-Busch. InBev is the world’s second-largest brewery by volume sold.

This consolidation talk has been bullish for the beer sector. As the following chart shows, an index of brewers is up 13% since February. The S&P 500, on the other hand, is down 10.8% over the same period.

Brewers Have Soared 13% Since February

This strength is a classic case of a “defensive” sector doing its job. Here’s the argument: In tough economic times, consumers tend to cut down on expensive motorcycles and boats, but they’ll keep drinking beer. (If they’re behind on their subprime loan payments, they may even increase their beer intake.)

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Anheuser-Busch isn’t solely responsible for the Brewery Index’s strong performance. Since February, Boston Beer (NYSE:SAM) is up 6.9%, Molson Coors Brewing (NYSE:TAP) is up 16.3%, and Constellation Brands (NYSE:STZ) is nearly flat at -1.4%. This is actually fantastic performance when the S&P 500 is cratering.

These shares are also doing well because speculators are betting more consolidation is in the works. Whether this consolidation happens or not, you should still consider a position in breweries. They’re simply one of the steadiest sectors in the market… especially during a recession.

Consider that Anheuser-Busch’s earnings grew from $1.33 per share in 2000 to $2.44 per share in 2003, during the dot-com crash. And here’s a look at how its stock and other major alcohol distributors performed.

Performance from March 2000 to March 2003 Boston Beer (SAM) 81.8% Molson Coors Brewing (TAP) 10.0% Constellation Brands (STZ) 93.3% S&P 500 -40.5%

As you can see, breweries are a solid recession investment. (They’re also a phenomenal way to invest in emerging markets. A single company often dominates an emerging-market’s beer industry.)

Brewery stocks are getting too much media attention these days (because of the Anheuser-Busch story)… so I won’t be surprised if they move lower over the next few weeks.

However, if the takeover goes through, InBev may be an interesting investment opportunity as the world’s undisputed king of beers. If you buy this stock – and others like it – you’re getting in on one of the world’s steadiest trends.

Source: A Simple Investment That Can Soar in a Recession

Will Emerging Markets Topple the King of Beers?

By Irwin Greenstein

Budweiser (NYSE:BUD) and Busch are as American as camo seat covers in a F-150.

Yet a hostile offer by InBev SA (PINK:INBVF) on Anheuser-Busch is about to show us that the star-spangled King of Beers is up for play because it ignored emerging markets.

When you look at the dynamics behind the InBev (EBR:INB) bid, it’s important to see America as a diminished player. The headlines tell you that the economy is dismal. What Big Media rarely tells you is that smaller, developing economies are kicking our butt. American companies that count strictly on the U.S. for revenues are destined for the rustbelt of the future — or a foreign buyout.

Analysts have been badgering A-B for years that it relies too heavily on the U.S. — one of the slowest growing beer markets in the world. A-B has buried its head in the sand as InBev and other competitors have pushed into high-growth emerging markets.

While A-B claims nearly 50% the U.S. market, the company registers as a mere blip in Argentina, Brazil, Russia and Eastern Europe, which are In-Bev strongholds. The worldwide market-share numbers tell the story loud and clear…

InBev 16%
SAB Miller (LON:SAB) 12%
Anheuser Busch 9%

You would think that A-B is willing to look beyond the lower 48 simply based on the performance of beers it imports from InBev. A-B grew its volume last year by 2.9% from the previous year thanks to a successful U.S. distribution partnership that gave it InBev’s Stella Artois, Beck’s and Bass premium beers.

Of course, most American’s believe they’re carrying the day for A-B by buying 12-packs of Bud, Busch and Miller Lite. In its marketing campaigns, A-B gives credit to the Nascar and slacker crowd for its crowning achievement as the King of Beers.

A-B’s Yankee Doodle marketing trumpet has deluded many Americans into believing that the company is entitled to its success because it’s an American icon. It’s the same patriotic hogwash that we heard about the Big Three auto makers — a case study that clearly proves denial is not an a business strategy.

When the In-Bev bid became public, the governor of Missouri declared he would explore all options to keep the company in St.Louis: “I am strongly opposed to the sale of Anheuser-Busch and today’s offer to purchase the company is deeply troubling to me.”

Maybe A-B’s hometown of St. Louis is afraid of becoming the next Detroit.

Or maybe America is afraid of becoming the next France…

A “save Budweiser” petition has already attracted more than 32,000 signatures on the Internet. The site even has an anthem titled “Kiss My Glass, InBev” The Save Budweiser rallying cry is “Let’s band together as one voice and try to save more than just our beer. We don’t want another American icon turned over to a foreign company; we want the motto to remain…The Great American Lager.”

You have to wonder how many of these cowboys and cowgirls are A-B shareholders. The company’s stock price has grown less than 3% in the last year. Factor in inflation, and your A-B stock won’t even pay to fill up that F-150.

A-B’s American sense of entitlement is backfiring at the worst possible time for the company. A-B owns 50.2% of Modello, the Mexican brewer behind Corona and other major brands. The partnership took a nasty turn last month when Grupo Modelo Chief Executive Carlos Fernandez resigned from A-B’s board of directors after a 15-year clash between the Busch and Fernandez dynasties.

Fernandez could’ve been a key ally in fending off InBev. Now there’s speculation that Modelo could sell its half to InBev — potentially crippling A-B’s presence in a lucrative emerging market.

InBev is already big in Latin America. It was formed from the merger of Belgium’s Interbrew and Brazil’s AmBev in 2004. Add Modelo into the mix and A-B wouldn’t stand a chance south of the border.

Compared with A-B, InBev is a true multinational. From its headquarters in Leuven, Belgium, it sells more beer than any other company. Its operations encompass more than 130 countries. About 60% of its profits come from Latin America, giving it crucial experience in emerging markets.

While InBev savors 12% of the Chinese beer market, A-B may have wasted precious time setting up shop in what some experts say is the world’s biggest beer market.

A-B had acquired Harbin, China’s fourth-largest brewer at the time in 2004. Now Harbin has dropped to fifth place.

It may have bungled another China opportunity as well. A-B formed a strategic alliance in China with Tsingtao in 2002. Under the terms of the deal, A-B took a 27% interest in Tsingtao. At the time, Tsingtao held a 13% share. Five years later, Tsingtao reaches 14% of the market, according to Reuters. One percent in five years?

In March 2007, A-B finally got around to announcing it was expanding Chinese distribution. Yeah, sure, OK…

In the end, both A-B and InBev aren’t doing too well these days. Profit margins are squeezed by rising prices of aluminum and grains. But this story is about bigger things than a stock recommendation.

We are witnessing the decline of America’s economic might. InBev’s attempted U.S. invasion is just a harbinger of things to come.

American investors can’t ignore that companies focusing on emerging markets will land on our shores with boatloads of money ready to buy our cherished industrial-age icons of commerce. So instead giving you a stock pick, my investment advice to you is: Get used to it.

Emerging markets are leaving the shadow of the slouching American giant. Once you accept that, you’ll see the profit potential of emerging markets in a whole new light.

Source: Will Emerging Markets Topple the King of Beers?

As I write this, one of the greatest icons of corporate America is in play. When all is said and done, global “value” investors including Warren Buffett will earn a tidy profit no matter what happens.

More than a year ago I wrote here in the A-Letter that even if you’re attracted to fast-growing global markets, you should still keep an eye on opportunities here in the United States. Specifically, I told you to pay attention to U.S. blue-chip shares offering healthy international exposure (Going Global by Investing Local).

In that article, I pointed out that these days many big U.S. multi-national firms get most of their sales and earnings from overseas markets.

Case in point: Anheuser Busch (BUD:NYSE). America’s largest beer company has made several successful overseas investments in recent years, boosting its bottom-line.BUD scored with a 50% stake in Mexico’s Grupo Modelo, the maker of Corona – one of America’s best-selling imported beers.

The value of BUD’s stake in Modelo has quadrupled in value since the 1990s. BUD made another shrewd move by making a strategic investment in China’s largest brewer: Tsingtao.

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Combined beer volume from these two overseas investments has soared more than 60% in just the past two-years. These two brands now account for over 20% of BUD’s total sales!

European Brewer Goes Global with a Buy-out Offer for BUD

Now, going global by investing local has been completely turned on its head. Another leading global beverage company is making an offer to buy-out America’s biggest local brewer. Read on to learn why Buffett may come to the rescue of Anheuser Busch from Inbev (INB:NYSE).

Source: Will Warren Buffett Save Anheuser Busch from Inbev?