How did InBev buying Anheuser-Busch affect the Stock of both companies?

Question

How did AB stock change before, right when the deal was made, and after. Also the same for InBev? Did every person owning AB stock get the $5 premium or whatever that was? I'm just trying to understand the whole deal.

Answer 1

US brewing giant Anheuser-Busch agreed to a $50 billion takeover by Belgium-based InBev NV, which in turn will create the world's largest beer maker. Anheuser-Busch was started 148 years back in St. Louis, when Eberhard Anheuser bought Bavarian Brewery in 1860. Later on, his son-in-law Adolphus Busch took over and then began the Busch family’s dominance. InBev was formed when Leuven-based Interbrew SA bought Sao Paulo- based Cia.de Bebidas das Americas, or AmBev, in an $11 billion transaction. Its portfolio includes more than 200 brands.

This takeover comes after a month of court fights and public disputes over the future of Anheuser-Busch. InBev’s improved purchase offer of 70-dollar-a-share has put an end to their hostility. Three months earlier, it had offered 65-dollar-a-share. Once this deal gains regulatory approval, it would be the largest in alcoholic drink history and the second biggest of a U.S. consumer-goods company. The combined company will be called Anheuser-Busch InBev. The combination of Anheuser-Busch and InBev will create the global leader in the beer industry and one of the world's top five consumer products companies. It would offer consumers about 300 brands, including Anheuser's Budweiser and Bud Light and InBev's Stella Artois and Beck's.

The company will make St. Louis, Missouri the headquarters for the North American region and the global home of the flagship Budweiser brand. Anheuser-Busch will get two seats on the new company's board, its current president and CEO August Busch IV and another current or former director from the Anheuser-Busch Board.

The expanded company will aim to have leading positions in the world's top five markets - China, U.S., Russia, Brazil and Germany and balanced exposure to developed and developing markets. The transaction will create significant profit potential both in terms of cost savings and revenue enhancement.

Answer 2

Inbev stock has traded down from about $48 to $42 since they made the announcement, while Bud stock is up from about $55 to over $67 during that time.  Inbev was actually rumoured much earlier than the formal announcement, and Bud actually traded up from $50 when talk first started to swirl.  tba

Answer 3

When it comes to deals, buy outs, take overs, mergers, etc, as soon as the deal terms are announced, the acquiring company's stock normally goes down due to the expense of doing the deal, and the acquiree (target company's) stock goes up instantly near the deal price.  

If the price of the target company goes higher then the deal, then Wall Street believe the deal is undervalued and another bidder may surface. if this does not happen the stock price is adjusted.

In this case, you had to own the stock before the deal was announced to get the biggest pop. There was some volatility and resistance from AB to do the deal as controlling family AB shareholders didn't want to sell. In the end, they did want to sell, only for more money, and they got it.

KA-Ching.