Is A-B InBevs dividend increase a sign?

Is A-B InBev's dividend increase a sign?

Analysts last week were grappling with the hoary old question of whether Anheuser-Busch InBev was lining up a joint bid for beer rival SABMiller.

Now that A-B InBev has released its full-year results, the analysts are back at it. Only to once again come up with the same answer - maybe.

Nonetheless, in a note today, Bernstein's Trevor Stirling makes the point that the Budweiser owner this week significantly raised its dividend. Not only is this a sure fire way to win praise from analysts, it is - as Stirling notes - what Belgium's InBev did ahead of its bid for Anheuser-Busch. Back in 2008, InBev took its pay-out ratio to 80%, according to Stirling, before reducing it a year later. 

Stirling also says that debt is very cheap, while SABMiller's senior management seems currently to be in transition, an observation strengthened last week by the departure of CFO Jamie Wilson.

But despite these ticks in the yes box, Stirling still feels that SABMiller is an acquisition too far for A-B InBev.

The old Anheuser-Busch was a “poorly-run company” with a flat-lining share price, Stirling says, and he is confident (“perhaps erroneously”, he hedges) that today's A-B InBev is keener to chase shorter-term investments, rather than embark on the long-term project SABMiller would be.

Stifel's Mark Swartzberg, on the other hand, is more bullish on the prospect of M&A activity for  A-B InBev. He flags the same cheap debt as Stirling but also the company's declining debt-to-EBITDA ratio that should fall from 2.27x as of year-end 2014 to 1.9x by the middle of next year.

It should be remembered, of course, that talk of a "mega-merger" between A-B InBev and SABMiller has been doing the rounds for several years

This week's chatter adds yet another layer to an already complex - and long-running - debate.