Anheuser-Busch (BUD) is threatened by an InBev takeover like its home city of St. Louis is menaced by the rain-swollen Mississippi. But, BUD took its first step to save itself by rejecting InBev’s $46.3 billion offer. The company’s board thinks it can improve "shareholder value" on its own.

That is not likely and it points to a breakdown in the ethics of board members faced with an rich offer to buy the company they control. No one with an abacus or calculator could possibly make the case that BUD can get its business in order in a way that would push its share price to the level that InBev has on the table.

After InBev announced its assault, BUD’s stock price went as high as $62.72. A look at the company’s share price back to 1983 shows that the value of Anheuser-Busch has never been nearly this high. Over the last two years, the price of the stock has only averaged about $50.

BUD says it could sell off its theme parks and packaging company to try to get the stock up. It could also cut costs. It could have done those things before, but it didn’t.

For the last three years, Anheuser-Busch’s operating income has run about $2.7 billion. It show no signs of rapid growth, which means the market value of the company has not reason to move up.

Boards have a simple ethical obligation to shareholders. At BUD, the board has breached that promise. In his heart of hearts each member knows that if InBev walks away, Anheuser-Busch shares drop back to $50.

Douglas A. McIntyre

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