The chatter that Heineken is looking to expand into the U.S. is growing louder. Market rumors last week sent Boston Beer Company (SAM) higher, Bernstein added to the froth by suggesting that Heineken (HEINY) could be a possible acquirer. Evercore ISI analyst Robert Ottenstein issued a note Monday that Heineken will eventually greatly expand its presence in the U.S. through acquisition and become a leading player in the U.S. beer or alcohol market.
At a time with the global financial markets are in turbulence funded takeover deals seem like a stretch, cash positions are important to take advantage of opportunity. With American regional banks collapsing, Credit Suisse taken over and Deutsch bank ravaged by rumors and short sellers, competition would beat a minimum for potential suitors. Evercore analysts noted Heineken have no burning need to do something in the near future and is expected to be patient before pulling off a deal.
Heineken NV – OTCM: HEINY
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Ottenstein said it could be strategic mistake to think of the U.S. business as just a beer business. “Lines are blurring, RTD drinks are changing the industry, and the landscape may look very different in 5-10 years,” he wrote.
Evercore noted that geographic diversification is a way to protect long-term cash flows. In addition, the relative stability of the U.S. and the dollar are thought to be attractive to the Heineken family.
Shares of Heineken (HEINY) are up 11.69% on a year-to-date basis with the beverage sector as a whole outperforming the broad market. Heineken has outperformed Anheuser-Busch InBev (BUD), which is up 4.33%.
Source: Evercore
From the TradersCommunity Research Desk