First, let’s dispense with the caveat that the market was “due” for a bounce, either for technical reasons as Minyanville’s Kevin Depew predicted this morning, or simply because it had come down a long way in a short period. Bounce it did, with
Anheuser-Busch has tried all the usual tactics to defend itself against the unwanted $46.3 billion takeover bid by InBev NV, but now it has resorted to more inventive means.
The brewer of the iconic American beer, Budweiser, has sued InBev and called the Belgian’s beer company’s takeover attempt an “illegal plan and scheme” to acquire Anheuser “at a bargain price.” Translation? How dare those European barbarians practice good old American style capitalism?!!
Anheuser-Busch also accused InBev of “a course of deceptive conduct” and asked for an injunction to stop InBev’s efforts to remove Anheuser-Busch’s board until certain false and misleading statements were fixed. InBev could not be immediately reached for comment.
The lawsuit said InBev has failed to disclose information about its Cuban business and how that would impact its promise to keep the combined company’s North American headquarters in St. Louis.
Anheuser-Busch on Monday had bashed InBev for its ties to Cuba. InBev has a subsidiary that partners with the government of Cuba to produce and distribute Bucanero, Bucanero Malta, Bucanero Max, Cristal and Mayabe brand beers.
InBev said its volume of beer sold in Cuba constitute less than 1/2 of 1 percent of its total global volumes. The Belgian brewer also said its Cuban business does not violate U.S., EU or international law, and it would continue to comply with those laws if it were to successfully acquire Anheuser-Busch.
So, what’s next?
Anheuser-Busch has said that InBev’s $65 per share offer was too low. But it still represents a premium to where BUD’s stock price now trades. In May, one of Anheuser-Busch’s own financial advisers, Goldman Sachs, reaffirmed its 12-month price target of $49 on BUD’s stock.
It also said InBev’s proposed nominees to replace Anheuser-Busch board was a self-serving effort. Anheuser-Busch said “shareholders should ask themselves whether the directors selected by InBev would negotiate the best transaction for Anheuser-Busch shareholders.” One of InBev’s nominees is Adolphus Busch IV, the uncle of Anheuser-Busch’s current CEO and a BUD shareholder.
Anheuser-Busch also said its own plans would provide better value for shareholders than InBev’s offer, but so far the company’s efforts to cut $1 billion in costs and improve earnings has failed to spark a jump in Anheuser-Busch’s stock price.
Will the sheer volume of BUD’s arguments sway shareholders its way? The jury is still out, but it’s looking doubtful so far.
Merrill Lynch raised more than $12 billion in December and January, but the capital offerings included an unusual feature: a promise to protect the investors from future capital raising.
Those provisions are limiting Merrill Lynch’s choices now as it looks to raise capital. If Merrill were to try to offer more than $1 billion of equity capital at its current share price, it would have to raise an additional $4 billion under the provisions of the December and January deals, to compensate those investors.
That’s why Merrill Lynch is much more likely to try to sell assets, analysts said.
Below is a table that shows how much additional capital Merrill Lynch would have to raise if it tried to sell at least $1 billion of common stock or securities convertible into common stock. The top table assumes that Merrill sells shares at its current share price.
The interactive calculator below that allows you to input a share price, to see how much more Merrill would have to raise.
The calculation is based on the approximate number of shares Merrill sold in its December 24 offering, and the number of shares that its January 15 convertible offering can convert into. If Merrill issues shares at a price below the “share price embedded in those offerings,” it must compensate the December and January investors. The additional payment Merrill must make is essentially equal to the “share price embedded in those offerings” minus the current share price, times the approximate number of shares sold.
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The stock market was struggling to make much headway Tuesday morning even as oil prices retreated again and Ben Bernanke reiterated the Fed’s willingness to aid ailing Wall Street firms. Still, the market is technically poised for a “relief rally,&qu
Sovereign wealth funds meet this week to uncloak any political motivations that might lurk behind their rich capital infusions. The talks are focused on devising a code of ethics to allay Western fears and could help create transparency. Alas, most of substance is being debated behind closed doors. It is being held in Singapore, so perhaps we shouldn’t be surprised that transparency is not a particularly high priority. The funds, controlling an estimated $3 trillion in assets, are owned by national governments and often armed with cash piles from soaring oil prices and trade. They have sunk billions into Citigroup and UBS, which were reeling from the collapse of the U.S. subprime mortgage market. Goldman Sachs estimates U.S. and European banks may need a further capital infusion of more than $200 billion.
It’s a good thing for Anheuser-Busch that Bud Light is so popular. If Belgian-Brazilian brewer InBev manages to take over the company, it will probably put it on a serious diet as it aims to trim up to $1.4 billion of costs. Employees and union officials at InBev describe the tightest of budget controls: mobile phones taken back and returned only to employees who justified a need for one; new pens given out only in return for used ones; and an elevator at the global headquarters closed for several months. The elevator is back in use now, although signs in the lobby read: “Why not take the stairs?” InBev says many such measures, and notably larger water and energy conservation efforts, also serve sustainability targets and that its cost-saving push is simply one pillar of an overall strategy also focused on boosting beer volumes.
Shares in British retailer Marks & Spencer are up on market talk of possible bid interest in the retailer. Rival department stores owner Philip Green, who was linked with a stakebuild in M&S in January, was again mentioned as a possible suitor, traders said, but some attributed the bounce to expectations for upbeat news from an upcoming M&S annual general meeting. Boss Stuart Rose, lauded for reviving the landmark British retailer just a year ago, is battling to save his job after a big profit warning and bungled management changes.
Want more evidence the credit markets are on ice? CIT completed a $100 million loan agreement with Daryl Katz for the purchase of Canadian ice hockey team the Edmonton Oilers, according to the Wall Street Journal. Katz agreed to purchase the Oilers in February for $200 million. “The debt markets have been a little finicky,” Gordon Saint-Denis, managing director of media, entertainment and sports for CIT, told the paper. “But this is a deal for a hockey team in Canada, where hockey is king, and Edmonton has been doing very well from an economic standpoint,” he was quoted as saying.
Other deals of the day:
* Spanish oil company Repsol is in talks with Russian oil major Rosneft about taking a stake in the Sakhalin-III oil and gas fields, a company spokesman said on Tuesday.
* Singapore conglomerate Fraser and Neave said its property unit has bought 17.7 percent of Allco Commercial REIT and all of the real estate investment trust’s manager for S$180 million ($132 million).
* Spanish low-cost airlines Vueling and Clickair have agreed to merge, Vueling said, in a move to create a carrier better equipped to tackle stiff competition and high fuel costs.
* U.S. asset manager Janus Capital Group said it is paying $90 million cash to raise its stake in Chicago-based money manager Perkins, Wolf, McDonnell and Company to 80 percent from 30 percent.
* Ameriprise Financial, an asset manager and broker specializing in retirement plans, said it agreed to buy asset manager J & W Seligman & Co for $440 million.
* China’s Sinosteel took a big step closer to acquiring Australian iron ore prospector Midwest Corp, with Midwest’s directors lining up to sell their shares after a merger with Murchison Metals collapsed.
* Designer Roberto Cavalli has decided not to sell his fashion house, he told Il Sole 24 Ore newspaper, because prices have fallen during the financial market crisis.
They call it the Duck Pond, but it’s actually teaming with (vicious) swans. It’s considered a big media and tech powwow, but a broad swath of global corporate titans of finance and politics round out the guest list.
It’s the 26th annual Allen & Co Sun Valley conference, where high-wattage huddles transpiring on the tranquil resort grounds among stunningly rich business people swathed in questionable leisure wear could end up in big deals months from now. The legend springs from the track record: AOL and Time Warner, Walt Disney and CapCities/ABC, Google and YouTube are all said to have gotten started here.
In between knitting (!), yoga, white-water rafting and golfing, and bridge (!) games execs like Google’s trio Eric Schmidt, Larry Page and Sergey Brin mix it up Disney’s Bob Iger, Time Warner’s Jeff Bewkes and News Corp’s Rupert Murdoch.
Although the mood this year is decidedly somber as the deteriorating U.S. economy weighs heavily on the minds of moguls, deal chatter persists and will likely center on what AllthingsD’s Kara Swisher likens to the Godfather-like meeting of the five families — the drama over who’s going to link up, buy, merge, strikes with whom playing out between Google, Yahoo, Microsoft, Time Warner and News Corp.
In particular, Yahoo’s Jerry Yang and Sue Decker are under the hotlights again after billionaire investor and career agitator Carl Icahn fired another salvo on Monday urging shareholders to join his campaign to wipe clean the board slate and pave a way towards a deal with Microsoft. Microsoft’s backing Icahn, it seems. The software maker is open to pursuing a deal to buy all or part of Yahoo — only if a new board is elected.
The only thing missing from the pitch: price.
Gordon Crawford of Capital Research & Management, which owns 16.3 percent of Yahoo, is also mulling backing Icahn, Swisher reports. Crawford is expected to attend as well.
Meanwhile, Time Warner’s Jeff Bewkes could seal a deal to merge the company’s AOL operations with Yahoo and take a stake in the embattled Web giant in time to appease shareholders at Yahoo’s Aug. 1 annual meeting. Or maybe not so fast.
(Photo: Reuters/Rick Wilking)
