Risk Rap

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InBev Looks To Chug a Few Long Necks and Knock Down Some Tall Boys

In a sign of the weak state of the dollar, the Belgian-Brazilian brewer, InBev has made an unsolicited takeover offer to acquire the leading American brewer and corporate icon Anheuser-Busch (BUD). The much beloved maker and marketer of America’s favorite beer, InBev’s $46.3 billion offer for BUD is indeed a tall drink to down but is the latest example of the growing thirst of foreign investors for cheap American assets.

InBev’s offer may raise the ire of patriotic beer drinkers. Many see the acquisition as another example of the decline of America’s industrial capacity. The acquisition has the potential of becoming an emotional issue for Americans because of the strong cultural and national identification of the brand with the American psyche. Busch Stadium the home of the baseball Cardinals in St. Louis, the Clydesdales delivering Christmas trees to snowed in rural homesteads, frogs incantating the BUD mantra in the bayous of the south and urban hipsters greeting homies with a “waz up”has thoroughly ingrained the brand identity and product consumption into the American experience.

America is up for sale at bargain basement prices. The rise of the EURO against the dollar, constrained domestic credit markets and free markets insatiable thirst for efficiency, rationalization and optimal returns are basic economic drivers of this Trans Atlantic-Pan American cross border acquisition.

It will become a prominent theme for American business for the foreseeable future. When you say Budweiser, you said it all.

Risk: dollar denominated assets, currency, brand marketing, American industry, M&A, foreign exchange, EURO, EU,

June 17, 2008 Posted by | economics, private equity, US dollar | , , , , , , , | Leave a comment