Wednesday’s M&A Roundup: InBev Finalizes Purchase Of SABMiller, Walgreens-Rite Aid Merger Update & Goodyear Tire Gains On Acquisition Chatter
Wednesday’s trading session was characterized by the finalization of a $100 billion-plus merger between two international giants.
AB InBev (NYSE: BUD), parent company of several iconic beer brands including Budweiser, Stella Artois and Corona, was able to say on Wednesday it officially reached an agreement to acquire rival SABMiller for around $103 billion.
SABMiller, parent company of other iconic beer brands including Pilsner Urquell and Peroni, confirmed that its shareholders overwhelmingly voted to approve the merger.
The combined entity will account for a massive 46 percent of the world’s beer profits and 27 percent of global beer volumes.
Walgreens-Rite Aid Merger In Trouble?
Pharmacy chain Walgreens (NYSE: WBA) agreed to acquire its much smaller rival Rite Aid (NYSE: RAD) but in order to appease regulators, Walgreens needs to divest hundreds of stores.
The merger would combine Walgreens, the second largest pharmacy chain, with Rite Aid, the third largest chain, and create the country’s largest pharmacy chain.
Various media sources have suggested that regulators are requesting Walgreens sell all 650 stores to one buyer but doing so is obviously difficult, if not impossible.
To make matters more complicated, CVS Health (NYSE: CVS), the current largest pharmacy chain, may be interested in buying some of Walgreens’ stores in markets where it doesn’t have a presence but it is unclear if regulators would allow this to happen.
Finally, unconfirmed reports surfaced Wednesday afternoon that the 650 stores Walgreens plans on selling may not even be large enough to appease the regulators in the first place. The report was convincing enough for shareholders to pound Rite Aid’s stock as it lost nearly 5 percent.
Goodyear Gains 3% On Chatter
Goodyear Tire & Rubber (NASDAQ: GT) saw its stock gain nearly 3 percent on Wednesday after the company was rumored to be in discussion with private equity firms over a potential sale of itself.
The timing of the rumor is of particular interest to investors who may conclude that this is a case of “sell on the rumor,” rather than the popular saying “buy on the rumor, sell on the news.”
Goodyear announced on September 15 a long-term game plan which would result in $3 billion in operating income in 2020 and $5 billion in free cash flow.
The company’s CEO Richard Kramer said at that time: “Our strategy is built to take advantage of key industry drivers including the transition to increasingly complex, large-rim diameter tires and the growing influence of empowered consumers in all aspects of the tire buying process.”
If investors bought into the company’s long-term plan, what reason do they have to believe that the company would be in better hands under a private owner.
Meanwhile, Goodyear’s stock has gained nearly 30 percent over the past three months which calls into question how much a premium would a suiter pay following the recent strong run in the stock.