Anheuser-Busch InBev issues new shares
The time seems right, now. Or so they say. Anheuser-Busch InBev, the world’ s newly-formed number one brewer, launched an eight-for-five rights issue on 24 November at a steeply-discounted price of EUR 6.45 per share to partly fund InBev’ s USD 52 billion purchase of Anheuser-Busch.
The offer of 986.1 million new shares, to raise USD 9.8 billion as part of the refinancing plan for the takeover, runs from 25 November until 9 December 2008.
In Euro terms, the total size of the new issue is EUR 6.36 billion.
Observers have commented on the rights offering being heavily discounted. This cannot have done InBev’ s share price any good. For the past three months, InBev’ s shares have lost two thirds of their value. On 24 November 2008, InBev’ s stock was valued less than EUR 20 per share – a significant drop from the pre-Anheuser-Busch days in mid-April, when InBev’ s share price was EUR 61.
Blaming the current financial crisis, InBev on 14 October 2008 said it would postpone its previously announced rights issue. The brewing group said then that it would wait until financial markets had stabilised before launching the rights issue.
I don’ t think we can now say that financial markets have stabilised. But Anheuser-Busch InBev, by all accounts, cannot wait any longer.
In fact, the offer underlines the view that even well-positioned companies like InBev have to pay through their nose for fresh capital in this crisis.
Analysts say the rights offering now at least removes some uncertainty for investors and that the controlling shareholders would be buying more shares than initially indicated, removing an overhang of stock.
Anheuser-Busch InBev, as the new company is called, reported on 26 November 2008 that its controlling shareholders will subscribe to EUR 4 billion in new funds. After the completion of the rights offering, Stichting InBev, which is controlled by the original Belgian and the Brazilian owners, is expected to hold approximately 43 percent of Anheuser-Busch InBev’ s outstanding shares. Add to that the smaller shareholders acting in concert with Stichting InBev (EPS, BRC, Rayvax, Sébastien Holding, Fonds Président Verhelst SPRL and Fonds InBev-Baillet Latour SPRL) and they will own approximately 54.55 percent. The public free float will be 45.45 percent compared with only 33 percent before the purchase.
Apart from the rights issue, Anheuser-Busch InBev plans to divest non-core assets to raise a further USD 7 billion within the next 12 months.
As was reported, Chief Executive Carlos Brito said that InBev could do so by selling two to three businesses.
On 12 November InBev closed its deal to buy Anheuser-Busch for USD 52 billion, or USD 70 per share. The deal was financed through a USD 45 billion loan and an additional USD 9.8 billion of short-term borrowing bridging to an equity issue that must be completed within six months of the deal’ s closing.
A few days later, the U.S. anti monopoly authorities gave their consent to the takeover.
