Currency declines have...hurt the stock of...InBev. The Belgo-Brazilian brewer's stock fell 34 per cent over the past month, closing at €28.68 on Thursday amid fears over its exposure to the sliding Brazilian real (Brazil accounts for about half of InBev's profits.)
The lower InBev's stock falls, the more risky its planned takeover of US brewer Anheuser-Busch becomes. The brewer has already postponed a $9.8bn rights issue to help pay for the takeover, blaming volatile equity markets.
When the deal was announced in July, InBev's shares were trading at €45 and the company would have needed to issue around 196 million new shares to raise the $9.8bn, investment bank Dresdner Kleinwort said. It would now need to issue more than 320 million shares - and find people to buy them.
Anheuser's stock was trading at about $58 on Thursday, some 17 per cent below InBev's offer price of $70 per share.
So when I asked my old college buddy in a local investment firm back in May, what's all the financial activity around BUD mean, he told me that investors were betting that A-B was going to get bought. If BUD is trading 17% below the price shareholders are supposed to reap when InBev buys them out... One of you financial whizzes wanna explain all this?