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Anheuser-Busch 21 Nov 08

BUD

USD $70.00

Welcome upside

In our last review (FAT136), we discussed our thoughts on the likelihood that Belgian brewing giant Inbev would be successful in their planned takeover of Anheuser-Busch (BUD). Given Inbev’s deferment of their capital raising, Anheuser’s high level of debt and the tightened credit markets, we felt there was a reasonable risk that the deal would not eventuate.

As a result, we decided to take some profits off the table through a sell half recommendation. This allowed us to manage the risk of the deal falling through, while also retaining exposure to the potential upside. In the event, Inbev have been successful and Anheuser’s shares have ceased trading.

Each Anheuser shareholder will receive payment of $70 per share in respect of the takeover. As per the management’s statement “Anheuser-Busch’s shareholders holding through a broker or bank should receive information regarding their Anheuser-Busch common shares from the broker or bank.”

This translates into a 59 percent return on our original recommendation, including dividends.

Anheuser-Busch will be removed from the Fat Prophets Portfolio.

Snapshot BUD

Anheuser-Busch Companies Inc.

Anheuser-Busch Companies, Inc. (Anheuser-Busch) is the holding company of Anheuser-Busch, Incorporated (ABI), a beer brewer. The Company is also the parent corporation to a number of subsidiaries that conduct various other business operations. The Company's operations comprise four segments: domestic beer, international beer, packaging and entertainment, which contributed 74.7%, 6.6%, 10.9% and 7.8%, respectively, of the Company's net sales, during the year ended December 31, 2006. Approximately 93% of the Company's net sales are generated in the United States. Worldwide sales of the Company's beer brands aggregated 125 million barrels in 2006, which comprises domestic and international volume. International volume represents Anheuser-Busch brands produced overseas by company-owned breweries, under license and contract brewing agreements, plus exports from the Company's United States breweries.

Market Capitalisation

US$49,586m

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