Anheuser-Busch InBev S.A./N.V. (NYSE: BUD) shares bubbled up early Wednesday on the announcement of a potential merger among beverage giants. The company confirmed that it has approached rival SABMiller with a potential takeover bid. Ultimately, this would combine the two largest brewers in the world.
It is worth noting that no specific offer was announced. According to regulatory rules within the United Kingdom, Anheuser-Busch has until the end of the October 14 business day to make an offer or walk away.
Buying SABMiller would fortify Anheuser-Busch’s position in economies in Africa and Asia. SABMiller was originally formed by South African Breweries’ 2002 acquisition of the U.S. company, Miller Brewing. SABMiller employs roughly 69,000 people in over 80 countries, while Anheuser-Busch has operations in 25 countries and sales in over 100, with about 155,000 employees.
The combined company would boast a market cap in the area of $240 billion, which would easily make it one of the top 20 companies in the world by that measure, and potentially the top 15.
A few analysts recently weighed in on Anheuser-Busch, prior to this announcement:
- CLSA has an Underperform rating and lowered its price target to $114 from $120.
- RBC Capital has an Outperform rating and lowered its price target to $107 from $115.
- ING Group upgraded the stock to a Buy rating from Hold.
- Stifel has a Buy rating and lowered its price target to $139 from $143.
So far in 2015, Anheuser-Busch shares have underperformed the market. They are down 2% year to date, and over the past 52 weeks shares are down 2.8%.
Shares of Anheuser-Busch were up 6.8% at $115.39 Wednesday morning, in a 52-week trading range of $102.21 to $129.24. The stock has a consensus analyst price target of $132.05.
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