From stltoday.com:
Beer isnt the only product that bears the Anheuser-Busch Cos. name. But unlike their frothy friend, those other operations — including Busch Gardens — might not wear InBevs moniker should a deal with the Belgian brewer happen.
For weeks, analysts have speculated that InBev would sell off A-Bs packaging subsidiaries and its entertainment division. Now, as reports surface that InBev upped its offer to $70 a share, the analysts say theres even more pressure to strip out these operations and recoup money.
“While its too early in this process for InBev to have made decisions about all aspects of A-Bs operations,” InBev understands the theme parks contributions to the areas where they operate and will try to help preserve that role, spokeswoman Marianne Amssoms said.
Anheuser-Buschs noncore assets, unrelated to brewing beer, include 10 theme parks, four subsidiaries in its packaging group, agricultural operations, transportation companies and a resort in Williamsburg, Va.
The theme parks and packaging group alone are worth $5 billion to $6 billion, said Jack Russo, an analyst at Edward Jones & Co.
But selling these assets wont be easy or fast, analysts say.
WEAKER SALES FEARED
Busch Entertainment Corp. — which oversees three SeaWorld locations, two Busch Gardens parks and several other theme and water parks — employs about 26,000 people, mostly seasonal workers. Last years sales totaled $1.27 billion, about 8 percent of A-Bs net sales.
Analysts are expecting weaker sales this year for amusement companies because of the economy. For corporations, the slowdown also means tighter lending standards, which could keep a company from buying Anheuser-Buschs theme parks.
Still, even if financing were easy, the pool of potential buyers is small, industry analysts said.
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STOCK: Quote and other financial info for Anheuser-BuschTwo public companies that specialize in theme parks, Six Flags Inc. in New York and Cedar Fair Entertainment Co. of Sandusky, Ohio, hold relatively high amounts of debt and wouldnt be interested in more, said Hayley Wolff, an analyst with Rochdale Research in Stamford, Conn.
A larger corporation with its own line of parks, the Walt Disney Co., also probably would pass on the Anheuser-Busch locations because Disney positions its parks as destination places, not regional attractions, Wolff said.
That trims the pool to private-equity firms, yet financing also is tight there, analysts say.
A sale would “be difficult, certainly to do it quickly,” Wolff said. “It would be a longer process.”
A spokesman for Busch Entertainment declined to comment on a possible sale of the theme parks.
PACKAGING PROCESS
Anheuser-Buschs packaging companies could warrant a quicker sale because the packaging industry isnt as volatile, said Morningstar analyst Ann Gilpin.
The Anheuser-Busch Packaging Group, among four companies, supplies a majority of A-Bs beer cans and domestic lids; buys, sells and recycles aluminum cans; and manufactures other packaging materials.
Last year, sales for this group stood at $1.7 billion, about 10 percent of A-Bs net sales.
Owning these businesses gives the brewer control over much of its production chain, known as vertical integration.
In the last decade or so, more companies have shifted away from vertical integration, said Todd Zenger, a Washington University business professor who specializes in corporate strategy. Marketplace pressure to focus on one part of production contributed to that shift.
In Anheuser-Buschs case now, there isnt much incentive to own the ladder of resources.
“These are standard cans that they need to be manufactured,” Zenger said. Unless the products are highly specialized for Anheuser-Busch, the company can outsource these operations.
Anheuser-Busch declined to comment on its packaging division. The division has operations in Arnold and Bridgeton.
Regardless of the pressure to sell, InBev would wait to get the highest prices on these divisions, analysts said. “Theyre not going to do it at a fire-sale price,” said Russo.
