Through the first half of 2015, the volume of announced merger and acquisition activity is on a record-breaking pace (the data go back 35 years). While using dollar volume is a bit misleading without adjusting for inflation (ever wonder, like me, why movie theater box office receipts are based on ticket sales dollars rather than actual attendance?), there is no question that M&A is booming right now. And yet, one of my favorite acquisition-hungry companies, Anheuser-Busch InBev (BUD), has been very quiet. It has been two years since BUD spent $20 billion to lock up 100% of Grupo Modelo. This market environment (low interest rates and lots of synergistic corporate deal-making) would seem to fit right into BUD’s business model.
Over the years rumors have surfaced about their possible interest in Pepsi’s beverage business, as well as SABMiller’s non-US beer business, and either of those deals would clearly be a boon for investors (but I am not picky — anytime hugely accretive deal would be a welcomed development). I am hopeful that over the next 6-12 months BUD makes a splash in the M&A market. The recently announced merger of Heinz and Kraft might indicate that a BUD deal is not far off. 3G Capital, the private equity company behind the Heinz deal, has also been instrumental in creating the behemoth that has become Anheuser-Busch InBev over the years. Now that the Kraft deal has been struck, I am hoping BUD is next on the to-do list.
Full Disclosure: Long shares of BUD and KRFT at the time of writing, but positions may change at any time