How Much Is Too Much? The Case of the Anheuser-Busch INBEV Takeover
نویسنده
چکیده
On June 11th, 2008 InBev made a $65/share bid to buy Anheuser-Busch stock and was rejected. InBev devised a plan to oust the management of Anheuser-Busch and selected another management team to take their place. This is, to date, the largest hostile bid in U.S. history. This paper extends Margrabe’s (1978) stochastic option model by applying it to hostile takeovers. The model in this paper is applied to AnheuserBusch and InBev to: (1) estimate the probability of a takeover, and (2) determine the point at which a hostile suitor needs to change strategies. The hostile premium option model demonstrates general applicability to hostile bids in the form of proxy contests or tender offers, as well as to both domestic and foreign corporations.
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