It must have been a deeply emotional board meeting for Anheuser-Busch Cos. (NYSE: BUD). In family control for more than 150 years, the company has become a quintessential American icon.Despite all this, Anheuser's had no choice in selling out to InBev NV, a giant beer company based in Leuven, Belgium.
Simply put, the offer was too rich: $49.91 billion. After all, over the past few years, Anheuser was a laggard. What's more, the plunging dollar has made it easier for foreign-based buyers to make plays for U.S. companies. It seems that no company is immune.
The Anheuser-InBev merger combination -- which will be called Anheuser-Busch InBev -- will result in the world's largest beer company (the #2 will be SABMiller PLC). In all, revenues will amount to roughly $36 billion.
For InBev the deal carries lots of risk. The valuation for Anheuser comes close to 15X EBITDA (earnings before interest, taxes, depreciation and amortization). Furthermore, the deal involves a huge slug of debt. Then again, over the years, InBev has demonstrated savvy M&A skills, wielding a strong cost-cutting knife.
In the end, it's the shareholders who are cheering, with Warren Buffett being particularly joyful. His company, Berkshire Hathaway (NYSE: BRK.A), owns 5% of Anheuser.
Tom Taulli is the author of various books, including The Complete M&A Handbook
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