Anheuser-Busch received a green light by the US Department of Justice for the proposed acquisition for the shares it doesn’t already own in Craft Brew Alliance (CBA).
Anheuser-Busch (BUD) said that the clearance comes after CBA received shareholder approval of the deal and the decision to sell CBA’s Kona Brewing operations in Hawaii to PV Brewing Partners. The closing of the combined company is expected in the coming weeks.
According to the terms of the deal, CBA (BREW) shareholders will receive $16.50 in cash per share of Craft Brew Alliance common stock. Previous to the deal, which was announced in November, Anheuser-Busch owned a 31.2% stake in CBA. BREW shares closed 6% higher at $16.47 on Friday.
“The beer industry in the US is competitive and dynamic, with more choices available to consumers than ever before,” said Anheuser-Busch’s Marcelo Michaelis. “CBA’s diverse portfolio of national lifestyle brands and award-winning regional breweries are an excellent complement to our family of craft partners and would continue to help fuel the growth of the craft beer category.”
Formed in 2008, CBA is headquartered in Portland and operates breweries and brewpubs across the U.S. CBA beers are available in all 50 US states and 30 different countries around the world.
Shares in Anheuser-Busch have this year lost 30% as global lockdown orders tied to the coronavirus pandemic have curtailed beer and other alcohol sales as restaurants and bars remained closed and some countries like Mexico were forced to shut down beer production.
Argus Research John Eade recently raised the stock’s price target to $62 (7.7%) from $52 and reiterated a Buy rating, saying that although the company’s 2Q results were impacted by the pandemic impact, they improved on a sequential basis. (See Anheuser-Busch stock analysis on TipRanks).
Eade believes that over the long-term, BUD is set to benefit from under-penetration in emerging markets, growing demand for premium beers, and increased sales of “near-beer” and non-alcoholic beverage categories.
Overall, Wall Street analysts are cautiously optimistic on the stock. It scores 4 Buy ratings and 3 Hold ratings, which add up to a Moderate Buy consensus. The $67.34 average price target indicates 17% upside potential over the coming year.
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