Johnny, being in the business you obviously have your contacts as any good DD hound should. I became good friends with a retired beer veteran of a major company. I came to learn well after the fact that what we're sitting on is nothing new. These Labatt and Wild Turkey rumors did not just appear out of thin air. We've all seen this week how Sands cooked a deal without even bidding it for Constellation to divest of some of its core brands. It's the nature of the business and our economy right now.
Apparently, back in 2006 Drinks had gone out virtually overnight and secured the capital to make a cash offer for Rolling Rock he tells me. It was all but a done deal until AB swooped in and picked it up at the last minute for what he is guessing was twice the price. They could afford to do that! Then we learned that Drinks was approached by AB (we're guessing from the letter but it is obvious who the reference is of) to buy the Rheingold brand until they were acquired by InBev. Strange how InBev owns it all now huh?
Now, Labatt USA is for sale which of course houses Rolling Rock but which may or may not be included in this particular deal as the DOJ has ordered ONLY Labatt be divested. A sticky wicket for sure since 55 employees at Fountain Plaza are managing a number of brands plus Labatt that are housed under the Labatt USA umbrella. Still, when the name Drinks Americas crosses the table, a certain level of commitment to the growth of Rolling Rock and the business has to come to mind.
The point though is that Drinks is more than the company it appears to be on face value, which is how people immediately look at it; the financials only. They never take the time to realize that it is ripe FOR acquisitions by the technicals of the company they are acquiring, not their own. If they did it once, they could easily do it again. Will somebody pay twice the price again? Sure they could. But since everything is getting rolled and folded in this business every day, it boils down to more than just money.
This tiny piece is just part of a bigger puzzle. Once people realize the ONLY reason you grow by acquisition is to create a viable interest for buyout from another party, then we will be well on our way. No one would ever part with a single share then. In fact, everyone would be foolish not to load up to the max because no matter what happens in 12 or 24 months, this stock and this company will 1000% be worth more than 20 cents a share. It literally is like a guarantee that you could put in front of any investor today. Learn this, and hear this now. It does not have to be Wild Turkey or Labatt. It can be any number of proven brands to acquire. The fact remains that when Kenny said they will grow the business by acquisition, that was your consummate BUY rating on the company. Just look at what one rumor is doing. Imagine what 6 acquisitions coming to fruition would do.
Just go to the folks at AIG or LEH or MS or WAMU and ask them if they would take a guaranteed appreciation on their investment over the next 12 or 24 months over sitting in their dividend paying "never going to fall from grace" enormous retirement accounts from the aforementioned companies. A year ago, they would have told you to take a hike and get away from me with that crap. Now they are singing a different tune.
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