This Bud's For...InBev? - Momentum Trades : Momentum Trades

This Bud's For…InBev?

There are reports out that Belgian brewer InBev is interested in making a bid for Anheuser-Busch (BUD, $56.13, up $3.55). The offer could be in the range of $46-$50 billion. Of course, AB said it was their “policy to not confirm, deny or speculate on rumors of potential investments, acquisitions, mergers, new business partnerships or other transactions.”

The offer would supposedly be worth $65 a share, but InBev was “not about to push the button.” Shares of AB have traded to a high of $58 today as it is believed that InBev has been talking with JPMorgan and Santander about financing $50 billion.

A deal between InBev-Anheuser has been in the works as early as 2007 and nothing is imminent. However, now would be the best time to for InBev to buy AB as raw material costs continue higher and the fact that the euro is much stronger than the dollar right now.

Whether a deal is consumed or not there has been considerable action in the June call options. The June 55 calls (BUDFK, $3.10, up $1.95) are up 170% as 45,000 contracts have traded. The 55’s have traded as high as $4.50. The June 60 calls (BUDFL, $1.20, up $0.84) are up 233% and hit a high of $1.90 earlier in the session. Over 70,000 contracts have traded so far today.

Be careful jumping into the action as the options are trading at a premium right now.

Rick Rouse
Rick@OptionsMentoring.com

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