Years ago we suggested that investing in beer, that is to say investing in companies that brew and distribute beer, was a good idea.
Whether your beer of choice is made by Anheuser-Busch or Inbev, Molson Coors or Carlsberg these companies have the capacity to make money year in and year out. There also have been a series of mergers and acquisitions in the brewing business over the years making for some interesting investments.
In 2008 Anheuser-Busch and InBev merged. SAB bought out Miller in 2002 and then Molson Coors in 2007. Today there is talk of a merger of Anheuser-Busch InBev and SABMiller. The question is if one can invest profitably in a BUD SBMRY beer merger.
Pros and Cons of the Next Beer Company Merger
The Street reports that Anheuser-Busch InBev could bid for SABMiller.
European stocks rose on Wednesday, taking the baton from Asia, amid a flow of predominantly positive earnings reports and a hive of corporate activity including the possible mega-merger of brewing market leader Anheuser-Busch InBev (BUD) with No. 2 SABMiller (SBMRY).
SABMiller said it’s expecting an offer from AB InBev but doesn’t have information on the terms yet. Based on current market values the merged entity would be worth almost $270 billion but the companies would likely have to make widespread disposals to get any deal past regulators. SABMiller was up by more than 20%, while in Brussels AB InBev gained almost 4%.
Apparently the market likes the deal as both stocks went up. Is there more profit to be made if you invest in a BUD SBMRY beer merger by way of either stock right now?
BUD is the largest brewing conglomerate in the world. Its roots are in Interbrew, AmBev and Anheuser-Busch. Interbrew goes back to 1366 when the predecessor of Stella Artois was founded. AmBev traces its roots to 1882 and the Brazilian beer, Antarctica. Anheuser-Busch was founded in St. Louis, MO in 1860. Today’s company holds a 25% percent global market share for beer. BUD sells for $116 a share, up from $16 a share in 2000. The stock DID NOT FLINCH during the 2008 stock market crash! Today it pays a $2.14 a share dividend, twice a year!
You can track the stock as BUD on Google Finance.
Google Finance: BUD
SAB stands for South African Breweries and was founded in 1895. The company steadily expanded internationally and moved its primary stock listing to the London exchange. It purchased the American brewer, Miller, from Altria in 2002. SABMiller is the second ranking brewing conglomerate in the world with operations in 80 countries. It is also a major bottler of Coca Cola. Its stock sells as an American Depository Receipt in the USA. Unlike BUD, SBMRY did take a hit in 2008 but grew from $13 to the $50 range to the present. Unlike BUD this stock has only distributed three dividend checks since the beginning of 2012, the most recent for $0.86 or 1.63% a share. Follow the stock as OTCMKTS:SBMRY Google Finance.
Google Finance: SBMRYMiller
The obvious takeover target here is SABMiller if you are going to investing in the BUD SBMRY beer merger.