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TLStockPicks (94.94)

Closing my BUD outperform call



June 12, 2008 – Comments (0) | RELATED TICKERS: BUD

In my rationale for calling a thumbs up for BUD, I mentioned that I was looking at it purely as an arbitrage play.  Now, the bid's been made, the stock's gone up around the 10% I was seeking since I made my call, and i'm pretty happy to take these gains and run.  If there's anything I learned from dabbling in arbitrage, it's that these things can fall apart for the most unexpected reasons.  No reason to be greedy and hang around for another 5% (assuming 65/share is the most inbev will offer) when the downside could be -20% back to the low 50's level.

Personally, I think the deal will have a rough time.  CFIUS has been notorious for its financial protectionism.  Granted, it'd be tough for them to pull out the trump card of "national security concerns" like they did on 3Com, but they'll find a way to stall this deal.  Throw some stretching antitrust arguments in there and this thing could drag on long enough to wear down everybody.  At the end of the day, I don't think there is a legitimate argument to block this deal, but the juice just isn't worth the squeeze this time.

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