Finanzas: Anheuser-Busch InBev master plan: Coke or Pepsi?

 

In a fresh note to investors, Susquehanna analyst Pablo Zunaic tackles the huge question of if PepsiCo (NYSE:PEP) or Coca-Cola (NYSE:KO) will be the next major target for Anheuser-Busch InBev (NYSE:BUD) down the road.

Though it’s highly speculative at this point, PepsiCo appears as the more logical choice if the pros and cons are lined up. Snippets from Zuanic’s note are posted below.

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On accretion value: «An acquisition of PEP drinks would be over 20% EPS accretive (one quarter stock funded), while a bid for KO would not (all cash a KO bid would push gearing to 8x).

«On global markets: «True, overseas KO is much larger than PEP, but that may be a moot point as the KO overseas business is mainly in the hands of independent bottlers (so is PEP’s except for Russia). But we think PEP bottlers in markets like Mexico, China, India, and Canada, could be more reasonable acquisition targets for BUD down the road (than KO bottlers) and would actually provide relevant scale up benefits.

«On distribution: «In terms of bringing scale to its beer distributors we note KO and PEP are similar in size in the US (in terms of end unit cases of NARTDs), but more importantly the PEP drinks business is 75% PEP owned while by end of 2017 KO’s US operating business (bottling and distribution) will all be in the hands of independent bottlers.

«On the Buffett factor: «Those expecting a bid for KO say so in part because of the Warren Buffet presence (holder of a 9.3% stake in KO), but would he really want that to be his legacy (i.e., the man that sold the Coke?).

«Current market caps: BUD $194B, KO $178B, PEP $149B.

Name check: Financing the deal is one matter, but negotiating a new corporate name for the mega-beverage entity could be just as engaging.

Fuente: Seeking Alpha


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