Wednesday, June 18, 2008

Buffett Says "Last Call" For Bud Brewer

Super-investor Warren Buffett wants the King of Beers to abdicate.
Anheuser-Busch Cos., which brews Budweiser, Bud Light and a slew of other beers, will soon be acquired, most likely by Belgium-based InBev NV. When that happens, the A-B beers will be absorbed into InBev's stable of nearly 200 different brands, including Bass.
After the purchase, InBev intends to cut over $1 billion in costs, so the next sound you hear will be the Budweiser Clydesdales clomping off into history along with a crush of U.S.-based jobs.
St. Louis-based A-B's management, headed by the long entrenched Busch family, is trying to thwart InBev's hostile $46 billion takeover offer. Nonetheless, the wealthy Buffett, a major
A-B shareholder, has other ideas. He's reportedly advised A-B management to take the InBev offer, which is pouring out a frothy premium over A-B's current stock price.
The Oracle of Omaha hails from Middle America but he also firmly believes that money has no boundaries. By selling his A-B stake to InBev, Buffett's investment vehicle Berkshire Hathaway stands to make a cool$600 million profit, according to Bloomberg Business News.Having Buffett on your team is a double-edge sword.When he's on board, no one is a better ally. For example, his backing helped smooth some difficult management problems at The Coca-Cola Co. (Buffett loves to buy brand names!). But when Buffett thinks the time is ripe to sell, sentiment doesn't get in the way.
That's how you know that A-B is cooked, despite the growing union and political objections to an InBev sale.
A-B management is trying to carve out a friendlier deal with a Mexico-based brewer but it's probably too late for that approach.
Warren Buffett has made his call. This Bud is sold.


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