BELGIUM: No rush for A-B disposals - InBev
Following reports that InBev is seeking swift disposals, particulary of several Anheuser-owned theme parks, in order to reduce concerns about short-term funding for the takeover, a group spokesperson has sought to play down the speculation.
"As previously discussed, we are contemplating disposals of certain assets from both companies," an InBev spokesperson told just-drinks today (4 November).
"However, it is too early to comment at this stage on which businesses specifically would be considered."
She added that disposals would be based on a "diligent review of the strategic and financial consequences of any divestment". Anheuser (A-B) owns a number of theme parks on the periphery of its beer business, including SeaWorld and Busch Gardens.
Several observers have raised questions about InBev's financing of the A-B deal, in light of the near-unprecedented volatililty in global financial markets. Some have questioned whether the deal would be completed.
Financial market turmoil has forced InBev to suspend a rights issue, intended to supply short-term funding.
Trevor Stirling, analyst for the Bernstein group, said in a report today that, while the rights issue likely remained the preferred option for the company, early disposals may act as a back-up for extra funding.
"In our view, if investors were comfortable that the deal could in extremis be financed in the short-medium term by a combination of debt and disposals, it would remove a major drag from InBev's share."
He said that he still expected InBev to complete the A-B deal, and that InBev leadership remained committed. He also added: "After consulting M&A legal specialists, we perceive that the risks of litigation [as a result of not closing the deal] far outweigh the possible benefits to shareholders of InBev walking away."
A US$1.25bn break-up fee would only apply in very limited circumstances, said Stirling, while breaking the deal outside of such circumstances could cost InBev tens of $billions in litigation.
The deadline for both firms to close the deal is 19 March 2009. An InBev spokesperson told just-drinks today that the Belgium-based brewer still expects to complete the takeover by the end of 2008.
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