June 26, 2008 at 2:00 pm by Tom Lydon
Belgium’s exchange traded fund (ETF) has fallen midday to its lowest point since June 2006 on news of a fight between Anheuser-Busch and InBev, along with news that a lender scrapped its dividend and will instead sell shares in an effort to raise capital.
Nearly two weeks ago, Belgium’s InBev made an unsolicited $46.35 billion acquisition offer to iconic American brewer Anheuser-Busch (BUD). The Budweiser maker is prepared to reject the bid, which could be setting the stage for a hostile takeover battle, report David Kesmodel, Matthew Karnitschnig and Dana Cimilluca for the Wall Street Journal.
If Anheuser says no, InBev might take the offer directly to the shareholders, but it hasn’t decided whether to take that route. If it does, it might go through, as many investors have said they support the bid. Anheuser is exploring steps to try and make its shares too expensive for InBev to acquire, but InBev has a carefully crafted battle plan, so it may not be deterred.
Belgium-based lender Fortis announced that it plans to raise $12.5 billion after scrapping its interim dividend, reports Simon Kennedy for MarketWatch. Standard & Poor’s warned that it would downgrade shares of the company over concerns about risk and potential earnings volatility.
InBev is 7.7% of the holdings in the iShares MSCI Belgium Index (EWK). Fortis is its largest component, with 25.1% of the assets.
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