Bud hauls down the colors; Yahoo! blows off Icahn's deal move; Stewart kills Service Corp. bid

By Aaron Hochman-Zimmerman

New York, July 14 - In what became an emotional matter of national pride, Anheuser-Busch Cos. Inc.'s fight to keep itself in American hands finally succumbed to a frothier offer from InBev NV.

Meanwhile, in another sticky fight, Yahoo! Inc. rejected Carl Icahn's most recent attempt to bring a resolution to the drama involving Microsoft Corp.

Yahoo! hinted that it would accept $33 per share, but would be harder pressed to break off the search business from the rest of the company.

Shares of funeral home operator Stewart Enterprises Inc. saw new life after the company rejected a $9.50 per share offer from Service Corp. International.

Elsewhere, Waste Management Inc. found itself obliged to get between the merger of its two major competitors.

Republic Services Inc. shares shot up as Waste Management made its offer to steal it away from Allied Waste Industries Inc.

In the larger market, the Dow Jones Industrial Average spiked as trading opened, but trailed off to end lower by 45.35, or 0.41% at 11,055.19, while the Nasdaq Composite Index lost 26.21, or 1.17%, to finish at 2,212.87.

The S&P 500 slipped 11.19 or 0.90%, to close at 1,228.30.

Bye, bye Bud

InBev added a little more malty sweetness to the deal and toasted the buyout of Anheuser-Busch at $70 per share or $52 billion.

After a great deal of bluster from politicians, local leaders and from within Anheuser-Busch itself, $5 more per share took down the iconic American brand which will now be called Anheuser-Busch InBev.

"All in all it is a bit surprising," said Morningstar analyst Ann Gilpin.

In light of InBev's moves towards making the bid hostile, Anheuser-Busch's decision makers likely said "we'd better step in and try to broker a higher bid," she said.

The loose thread that remains is Mexico's Grupo Modelo which is 50% owned by Anheuser-Busch, she said.

Modelo has rights in its contract with Anheuser-Busch and under Mexican law, which allows it the right of first refusal regarding the tie up with InBev.

"Our agreement with Anheuser-Busch was carefully constructed to ensure we have a definitive say in who our partner is," Modelo said in a statement.

"We are confident that our agreement, which is governed by Mexican law, gives us the right to decide whether or not to consent to the potential acquisition of Anheuser-Busch by InBev," the statement continued.

Talks between Modelo and InBev are expected, but what will happen "is a little unclear at this point," said Gilpin.

Either Modelo will buy back the Anheuser-Busch equity stake, Modelo will sell it to someone else, possibly SABMiller plc, or the arrangement will remain status quo, she said.

Shares of Anheuser-Busch (NYSE: BUD) added $0.37, or 0.56%, to close at $66.87.

The deal between Anheuser-Busch and InBev is scheduled to close before the end of the fourth quarter.

Yahoo! shoots down Icahn deal bid

Chalk one up in the loss column for famed deal-broker Carl Icahn over the weekend as Yahoo!, in no uncertain terms, rejected a joint Microsoft/Icahn deal to sell just Yahoo!'s search business.

Yahoo! chairman Roy Bostock dipped his pen in venom and wrote the letter of rejection to what he called the "odd and opportunistic alliance of Microsoft and Carl Icahn."

"Carl Icahn and Microsoft presented us with a 'take it or leave it' proposal under which we would be required to restructure the company, hand over to Microsoft Yahoo!'s valuable search business and to Carl Icahn the rest of the company, giving us less than 24 hours to respond," Bostock wrote.

"It is ludicrous to think that our board could accept such a proposal," he added.

Still, Bostock and Yahoo! left the door open to $33 per share deal, an amount which was given the thumbs down during the first round of talks between Microsoft and Yahoo!

The $33 per share figure does conveniently match a figure proposed by major Yahoo! shareholder, Legg Mason's Bill Miller, who said he would support Icahn if he could somehow guarantee that amount.

Icahn fired back, but stopped a hair short of calling the Yahoo! board liars, writing that they were willing to "omit and twist events and facts."

Icahn continued to plead his case for a sale: "I believe that, just like the $33 per share offer that was refused by Yahoo! in early June, refusing the Microsoft offer for the Yahoo! search business is also another grave mistake that will be deeply regretted. Our company is on a precipice and our board seems ready to take the risk of seeing it topple - ARE YOU, THE REAL OWNERS OF YAHOO!, WILLING TO TAKE THE SAME RISK?" he shouted in print.

Shares of Yahoo! (Nasdaq: YHOO) fell $1.00, or 4.24%, to finish at $22.57.

Shares of Microsoft (Nasdaq: MSFT) gave up $0.10, or 0.40%, to end the day at $25.15.

Stewart jumps up on rejection

Shares of funeral home operator Stewart Enterprises sprang back to life after the company rejected an $881 million or $9.50 per share offer from Service Corp. International - even though Service Corp. stated it has no intention of pursuing a bid at a higher price.

The offer was originally made on June 25, but only became public on Monday in an SEC filing.

Service Corp. "believes there is a compelling business case for a combination of the two companies and that the combination would result in delivering increased value to the stockholders of both companies, enhancing the value and services for customers and providing greater opportunities for the talented, hardworking employees of both companies," it said in the filing.

"Although [Service Corp.] continues to believe a combination with Stewart would benefit both companies and their respective stakeholders, [Service Corp.] believes that a combination can only be effected on a negotiated basis under the current circumstances and, accordingly, intends to honor the decision of the board of directors of Stewart," the filing said.

Shares of Service Corp. (NYSE: SCI) added $0.24, or 2.62%, to finish at $9.39.

Shares of Stewart (Nasdaq: STEI) shot up $1.24, or 17.74%, to close the session at $8.23.

Waste Management sees and raises

Waste Management offered Republic Services $34 per share for its business, which represents a 22% premium over Friday's close.

The offer puts itself between the arrangement for Republic to buy Allied Waste for what was, at the end of June valued at $14 per share.

"Our $34.00 per share all-cash proposal clearly offers a better and more certain value alternative to Republic stockholders than the recently announced Republic-Allied Waste Industries Inc. ("Allied") transaction, said Waste Management's chief executive officer David Steiner in a statement.

"We believe our proposal is a superior proposal," he continued.

Republic answered Waste Management's unsolicited proposal in standard fashion promising a thorough review and a response in due course.

"I think the Waste/RSG deal will go through" at the $34 per share offer price, an equity analyst said, adding: "If the regulatory approval is too steep, that might not sit well with Waste Management."

Still, "barring any sort of regulatory action," the analyst said that a completed deal is a strong possibility.

"Their hand was forced by the deal with Allied," he said about Waste Management.

Shares of Waste Management (NYSE: WMI) sank $2.12, or 5.79%, to $34.49.

Shares of Republic Services (NYSE: RSG) launched by $3.86, or 13.84%, to $31.76.

Shares of Allied Waste (NYSE: AW) slid $0.20, or 1.67%, to $11.79.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.