Perhaps this will be the year when replacing corporate boards hits a record level. Carl Icahn wants to do it at Yahoo! (YHOO). Several large investors have been taking a run at AIG (AIG). Now, InBev, which is trying to buy Anheuser-Busch (BUD) wants to replace the representatives of the shareholders there.
To rub salt into the wounds of BUD’s management, the "alternative board includes Adolphus Busch IV, the great-grandson of the Anheuser-Busch founder and the uncle of the current Anheuser-Busch chief executive, August Busch IV, according to MarketWatch.
Perhaps InBev does not need to go that far if the current board will do the right thing. The InBev bid has taken the BUD stock up to over $62. Over the last five years, the 200-day moving average of the shares has usually been well below $50.
Perhaps it seem simplistic, but a bird in the hand is worth two in the bush. That becomes even more true when the economy gets bad. BUD faces a very significant increase in its transportation costs as the price of gas moves up.
BUD’s earnings have not been outstanding over the last three years. A recession would make that worse, especially if the element of rising inflation is added. Moving up beer prices may be hard to do if the consumer has a dwindling supply of money. He may have to turn to cheap wine of moonshine.
The BUD board has the chance to drop the company’s problems into the lap of someone else. It should sell out to InBev as soon as possible.
Douglas A. McIntyre
Top Gaining Stocks
Top Losing Stocks