InBev on track to close Anheuser-Busch deal

In the United States, the symbols of capitalism may come tumbling down, yet InBev have said not to worry. With Anheuser-Busch’s shareholders getting jittery, InBev re-affirmed that they are still on track to close their USD 52 billion purchase of American brewer Anheuser-Busch by the end of the year.

InBev are raising USD 45 billion in debt to buy Anheuser-Busch for USD 70 a share, in one of the largest all-cash corporate mergers in history. Yet Anheuser-Busch’s shares, which in August had plateaued at USD 68, have started to decline, closing at USD 66 at the end of September. This was seen as an indication that some investors have doubts about the merger getting done amid worries about the viability of numerous financial institutions.

The decline may also be an indication that "merger arbitrageurs" - firms that bet on the odds of a merger being completed - have been selling their positions to raise cash.

InBev and its consortium of lending banks - which includes Banco Santander, Bank of Tokyo-Mitsubishi, Barclays Capital, BNP Paribas, Deutsche Bank, Fortis, ING Bank, JP Morgan, Mizuho Corporate Bank and Royal Bank of Scotland - completed the primary syndication of the new debt at the end of August.

The company has bridge loans that give it flexibility on deciding when to sell USD 7 billion in assets and raise nearly USD 10 billion in new equity, as required by the financing agreement.

Though the combined company, which will be called Anheuser-Busch InBev, will have plenty of debt on its balance sheet for several years after the deal (something that would give mere mortals a sleepless night or two), analysts say the company’s dominant position in the beer industry should make that debt manageable, moreover since InBev and Anheuser-Busch have strong cash flows.

In the meantime, InBev is waiting to receive the go-ahead from competition watchdogs.