Comments on: The InBev deal is bad for the US http://www.matthewsmith.com/2008/07/15/the-inbev-deal-is-bad-for-the-us/ Bam! Wed, 07 Jan 2009 09:53:33 +0000 http://wordpress.org/?v=2.7 hourly 1 By: admin http://www.matthewsmith.com/2008/07/15/the-inbev-deal-is-bad-for-the-us/comment-page-1/#comment-108 admin Thu, 17 Jul 2008 19:39:27 +0000 http://www.matthewsmith.com/?p=47#comment-108 While, I can agree that currency arbitrage was factored into the increased purchase price, it is hard to value the effects of a poor economy and currency issues on the ability for AB to generate growth. Between December 2007 and March 2008, the company’s stock price fell nearly 14%. I do believe that in a healthy economy, $70/share would have been a stretch. It would only be about a 20% premium over the 2007 price. And, sure, if you bought the stock at its low in March at $45, you are looking at a 35% increase. But, I am sure a lot of the stock holders DCA’d it at around $50. This is closer to a 30% return. Considering decreasing currency values, that is really only about 16% if they cashed out right now. And really, that is probably only covering losses from all other investments in the current market. Regardless, I am less disappointed at small investors. They really weren’t given a choice. I am disappointed at the large shareholders (I am looking at you, Busch family) who didn’t really put up a fight. In the end, greed won out. And, that will be the lasting legacy of the Busch family. While, I can agree that currency arbitrage was factored into the increased purchase price, it is hard to value the effects of a poor economy and currency issues on the ability for AB to generate growth. Between December 2007 and March 2008, the company’s stock price fell nearly 14%. I do believe that in a healthy economy, $70/share would have been a stretch. It would only be about a 20% premium over the 2007 price.

And, sure, if you bought the stock at its low in March at $45, you are looking at a 35% increase. But, I am sure a lot of the stock holders DCA’d it at around $50. This is closer to a 30% return. Considering decreasing currency values, that is really only about 16% if they cashed out right now. And really, that is probably only covering losses from all other investments in the current market.

Regardless, I am less disappointed at small investors. They really weren’t given a choice. I am disappointed at the large shareholders (I am looking at you, Busch family) who didn’t really put up a fight. In the end, greed won out. And, that will be the lasting legacy of the Busch family.

]]> By: Nick http://www.matthewsmith.com/2008/07/15/the-inbev-deal-is-bad-for-the-us/comment-page-1/#comment-106 Nick Thu, 17 Jul 2008 19:05:50 +0000 http://www.matthewsmith.com/?p=47#comment-106 Well it's not a good deal for St. Louis in any way. Unless you count the local investors who will now be flush with cash and hopefully willing to reinvest that money. Arbitrage has been factored into this deal. That's one reason they pushed for $70 a share when the company wasn't actually worth that much. I think it's a fair reality. It's the same if you would go and invest in India or Brazil or another emerging market right now. Well it’s not a good deal for St. Louis in any way. Unless you count the local investors who will now be flush with cash and hopefully willing to reinvest that money.

Arbitrage has been factored into this deal. That’s one reason they pushed for $70 a share when the company wasn’t actually worth that much. I think it’s a fair reality. It’s the same if you would go and invest in India or Brazil or another emerging market right now.

]]> By: Dan B http://www.matthewsmith.com/2008/07/15/the-inbev-deal-is-bad-for-the-us/comment-page-1/#comment-100 Dan B Tue, 15 Jul 2008 21:32:19 +0000 http://www.matthewsmith.com/?p=47#comment-100 I would have to agree with you. It is a bad deal all the way around. I would have to agree with you. It is a bad deal all the way around.

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