The InBev deal is bad for the US
July 15th, 2008To start off, I am a St. Louisan, and I think the InBev deal is bad for the city. I do understand that for the most part, InBev plans to keep things “business as usual” for the city and the company’s breweries. But, that doesn’t change the fact that the company has a responsibility to its shareholders, and as a result, will have to reduce operating inefficiencies to cut expenses. That means job cuts where there is redundancy. When choosing to cut jobs in St. Louis or Belgium, which do you think is more likely? My money is on St. Louis jobs.
Moreover, I think this deal is bad for the US. Sure, $70 a share seems like a good deal. But, if you consider that the dollar has decreased by nearly 14% when compared to the Euro over the last year, InBev is actually paying the equivalent of $60/share (in last year equivalent dollars) by taking advantage of currency arbitrage. And, the deal gets better day-by-day as the USD to EURO gap widens. What is even more troubling is that for the most part, AB is not a struggling company. AB is stagnant. But, what company has not been stagnant in the current economy? Allowing a foreign company to take advantage of currency arbitrage to purchase a perfectly stable US company is a bad precedent for our government to set.
Now, I am not a financial expert. But, I do think that when you factor in the currency delta, this looks like a bad deal. What do you think?



