Category: Articles

After knowing InBev wanted to buy Budweiser (BUD) for half a year now, the Dept. of Justice struck a blow to keep beer prices down at Bills and Sabres games.

From the release:

The Department of Justice announced today that it will require InBev N.V./S.A. to divest subsidiary Labatt USA, along with a license to brew, market, promote and sell Labatt brand beer for consumption in the United States, in order to proceed with InBev’s $52 billion acquisition of Anheuser-Busch Companies Inc. The Department said that the transaction, as originally proposed, would likely have led to higher prices for beer in the Buffalo, Rochester and Syracuse, N.Y., metropolitan areas.

The Department’s Antitrust Division filed a civil antitrust lawsuit today in U.S. District Court in Washington, D.C., to block the proposed transaction. At the same time, the Department filed a proposed settlement that, if approved by the court, would resolve the lawsuit and the Department’s competitive concerns.

According to the complaint, Anheuser-Busch’s Budweiser brands, including Budweiser and Bud Light, and InBev’s Labatt brands, including Labatt Blue and Labatt Blue Light, are the two biggest selling beer brand families in Buffalo, Rochester and Syracuse. The original transaction would have eliminated competition between Labatt USA and Anheuser-Busch and resulted in higher prices to beer drinkers in those metropolitan areas.

Under the terms of the proposed settlement, InBev must sell Labatt USA and grant a license to the acquirer to brew and sell Labatt brand beer for consumption throughout the United States. The Department’s Antitrust Division must approve the purchaser of Labatt USA to ensure that the sale will restore the competition for beer sales in Buffalo, Rochester and Syracuse that existed before InBev purchased Anheuser-Busch.

“This divestiture will ensure that consumers will continue to benefit from the significant competition between the merging companies in upstate New York,” said Deborah A. Garza, Deputy Assistant Attorney General of the Antitrust Division.

In the large majority of markets in the United States, InBev accounts for less than two percent of beer sales and engages in very little competition with Anheuser-Busch. In contrast, sales of InBev’s Labatt beer brands in Buffalo, Rochester and Syracuse account for a significant portion of beer sales. The Department concluded that in those markets, the elimination of the competition between InBev and Anheuser-Busch would have resulted in higher prices for consumers. The proposed settlement will allow the purchaser of Labatt USA to sell the Labatt brands throughout the United States.

It the little things the government does that make you all warm and fuzzy towards it…

Disclosure (“none” means no position):None
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Arbitrage is the name of the game here…

Paulson & Co. added $1.8 billion of Budweiser (BUD), $1.4 billion of Rohm & Haas (ROH) and sold all of old Yahoo (YHOO).

Unlike most other funds reporting this week, Pauslon saw a 40% increase in holdings from $5 billion to $7 billion in value while the number of issue held stayed the same (22 to 23).

Disclosure (“none” means no position):
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Another coup for a Wilbur Ross investment.

The WSJ Reports

Bond insurer Assured Guaranty Ltd.(AGO) on Friday struck a $722 million deal to acquire rival Financial Securities Assurance Holdings from French-Belgian lender Dexia.

Dexia, which has struggled amid the credit crunch, will receive $361 million and 44.6 million shares in stock, giving the company a 25% stake in Assured Guaranty.

While Assured Guaranty will assume $730 million of FSA debt, the insurer won’t get the toxic assets contained in FSA’s asset-management business. Those will be guaranteed by the French and Belgian governments and wind down.

Assured Guaranty and FSA have remained the only AAA-rated U.S. bond insurers, as others around them have suffered amid the slumping value of structured investments such as collateralized debt obligations.

The purchase is subject, among other things, to the three major U.S. credit raters saying the takeover won’t hurt either company’s financial strength ratings. Moody’s Investors Service and Fitch Ratings have been reviewing FSA for possible downgrade.

Assured Guaranty will sell stock to raise capital for the cash portion of the deal and has a back-up financing commitment from distressed-asset investor WL Ross & Co., which would purchase newly issued shares. The company has about 91 million shares outstanding.

Assured Guaranty has been able to thrive in recent months as rivals suffered amid reduced credit ratings. It has become a big player in municipal-debt insurance, with its market share climbing to 44% of insured activity in the direct new-issue U.S. public finance market last month. That compares with 1.1% a year earlier, according to Thomson Reuters.

When this mess is all over, one can make the argument that Berkshire Hathaway (BRK.A) and Ross’s Assured will be the sole AAA rated bond insurers out there. Without competition from the Ambacs (ABK) and MBIA’a (MBI) of the world, the price they will receive for their services will rise as they pick and choose the deal they want and get the terms they want.

Bond insurance will again be a god business…for smart people..

Disclosure (“none” means no position):None
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Famed short seller Jim Chanos was on CNBC yesterday. Here are the clips. The next big short opportunity he thinks is health care service companies as he thinks their margins are going to come under pressure.

Part 1

Part 2

Part 3

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Grant is just awesome. This is good stuff

Tarp:

Grant and Dennis Gartman on US Automakers

Here is Grant’s upcoming book

My review of it is here.

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1987, Sprint, NFL, The Decade, MSNBC

– The Crash in video

– Loses another 1 million subs

– Vets win one in court

– How bad has it been?

– Journalism at it finest….no wonder nobody watches it

Disclosure (“none” means no position):
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This is hard to believe when you read it.

The WSJ Reports

The board of Citigroup Inc (C). is growing increasingly dissatisfied with the financial giant’s performance, and some directors are considering replacing Sir Win Bischoff as chairman, according to people familiar with the matter.

One leading candidate is Richard Parsons, Time Warner Inc.’s (TWX) chairman and a member of Citigroup’s board. Mr. Parsons ran a New York thrift in the early 1990s and is one of the few Citigroup directors with experience in financial services. He also is part of President-elect Barack Obama’s transition economic-advisory board.

Richard Parsons had spent a career in banking and was CEO of Dime Savings Bank of New York when he was named president of Time Warner in 1994, a move that caught many people by surprise. Mr. Parsons is credited with stabilizing the company, mediating between fractious divisions and reorganizing top management. In 2003, the board unanimously elected him to the additional post of chairman, which he continued to hold after stepping down as CEO in 2007. Mr. Parsons said in May he was likely to resign as chairman in 2009.

The possible replacement of Sir Win comes as the New York company’s board is adopting an increasingly assertive stance toward overseeing Chief Executive Officer Vikram Pandit and his tightknit team of executives. Those executives took power last December after Citigroup’s previous CEO, Charles Prince, stepped down amid mounting losses. Some directors have grown concerned that Sir Win, who is based in London, hasn’t been exercising adequate oversight.

It isn’t clear how many of Citigroup’s directors are agitating for the change, and it’s possible that the board will opt to stick with its current chairman.

“I’m not sure it will happen, but it seems likely” that Sir Win will be replaced, said one person familiar with the situation.

Sir Win, who has dual British and German citizenship, was traveling in the Middle East on Wednesday and wasn’t immediately available to comment.

Sir Win Bischoff was head of Citigroup’s European operations and little known outside the company when he was appointed interim CEO in November 2007. To the surprise of many who expected his leadership to be temporary, Sir Win was named chairman a month later when Vikram S. Pandit became CEO. Sir Win had no hands-on capital-markets trading experience, but had cleaned up after huge losses before, advising the British government on the rescue of Barings PLC after trading losses in 1995.

“Any report that the board is searching for a new chairman is false,” a Citigroup spokeswoman said Wednesday evening.

So, Bischoff is being ousted because of lack of “oversight”? Now, his replacement might be Mr. Parsons? This is the same Mr. Parson who sat there when Citi became the largest holder of mortgage assets in the world. The same Mt. Parson who defended ex CEO Chuck Prince to the very end.

This has to be a joke. You cannot under any circumstances replace the new buy for “lack of oversight” with an old guy who has been there even longer and oversaw the behavior that practically ruined the bank. It just cannot happen.

Not only should Mr. Parsons not be named new Chairman, he and the other members current board ought to be allowed to “pursue other opportunities”. They are the ones who oversaw the virtual destruction of the bank, they are to blame.

Disclosure (“none” means no position):Long C, none
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Just got this emailed to me….

So here is the official application for the TARP Plan (pdf).

Six pages long. If I wasn’t fairly convinced I would be arrested for applying, I would do it just to see what would happen (approved or denied). I am also fairly convinced there is someone out there who will.

I can’t wait to find out what happens.

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