BCE postpones dividend; Sirius upgraded, decision expected; InBev hints hostile

By Aaron Hochman-Zimmerman

New York, July 1 - Stocks waffled around on Tuesday, but InBev NV chief executive officer Carlos Brito was straight and narrow in a note to Anheuser-Busch Cos. Inc. which convinced most in the market that he was ready to take his bid for Bud straight to the shareholders.

Elsewhere, BCE Inc.'s shareholders will have to skip a $5 latte or two this quarter as it decided against paying its quarterly dividend in order to keep cash on hand to complete its privatization.

While shareholders sacrificed their dividend, speculation cropped up over how much more they might give up from the offer price to go private as some expect negotiations with the banks to end near Christmas.

Also, some investors bought into the idea that a Merrill Lynch upgrade for Sirius Satellite Radio Inc. may be able to speed up a decision from the Federal Communications Commission regarding its merger with XM Satellite Radio Holdings Inc.

Still, there were others who have heard the call of 'wolf' too many times and will believe the satellite radio deal is approved only when it is signed and certified.

Meanwhile, a rollercoaster day for the markets left the Dow Jones Industrial Average ended better by 32.25, or 0.28%, at 11,382.26, while the Nasdaq Composite Index added 11.99, or 0.52%, to finish at 2,304.97.

The S&P 500 managed to add on 4.91, or 0.38%, to close at 1,284.91.

BCE holds dividends

BCE decided to go into negotiations with its financing banks with the money that would have otherwise been its second quarter dividend.

After the close on Monday, the company announced that it would delay the $294 million in dividend payments.

Investors have been digesting the idea that negotiations to complete the deal may last six months and the some have suggested a new offer price as low as $35 per share compared to the current offer of $42.75 per share.

"They're probably happier" about the dividend, said an analyst who follows BCE.

Even negotiating the price slightly lower seems within reason, he said.

One shareholder was heard saying: "I'd rather take a small deal cut than a one-way ticket back to $28," he said.

Still, the suggested $35 per share is too low, the analyst said. "The company is a lot stronger than $35."

"It could probably trade about $35 on its own," he said.

If the deal is negotiated lower the shareholders will need to be rounded up for their votes of approval, which may put the deal's completion into the fourth quarter, he said, but if the price remains the same "what other hurdle do they have?" he asked.

Six months "is a pretty long time," he said, "my guess is that it's going to happen before Christmas."

Shares of BCE (NYSE: BCE) tacked on $0.15, or 0.43%, to close at $34.96.

InBev a hostile drinker?

In a not so subtle message to Anheuser-Busch, InBev chairman Carlos Brito repeated his "firm" offer of $65 per share and made note of his intention to talk about a merger with the individual shareholders, presumably over a beer.

In the note, Brito does not hesitate to mention Delaware Chancery Court and shareholders' ability to remove board members.

Many market-watchers consider a hostile bid to be InBev's next move.

"Our firm proposal of $65 per share reflects the full and fair value of the company. The proposal is backed by fully committed financing, and provides immediate certainty of value in a weakened stock market environment," Brito said in the statement.

One equity analyst said the key phrase is: "pursue all available avenues that would allow Anheuser-Busch shareholders a direct voice in the process."

Those words let the world know InBev is coming with a hostile bid, he said, although "Bud management doesn't want to give up this company at all."

Anheuser Busch announced a new efficiency plan during a conference call which is intended to be a quick hangover cure for the company's balance sheet.

"It'll be interesting to watch them flop on that plan," the analyst said, wondering why the plan was only launched after InBev came to town.

Still, if the new plan to slim down the company is not enough to save it, Anheuser Busch hopes it will be enough to shoot for a few dollars more out of InBev, but "they'll most likely win if they go hostile at $65," the analyst said.

Shares of Anheuser-Busch (NYSE: BUD) lost $0.18, or 0.29%, to finish the day at $61.94.

Sirius upgrade for radio deal

The radio chatter about XM Satellite Radio and Sirius Satellite Radio was that Merrill Lynch's upgrade to 'buy' from 'neutral' for Sirius was some kind of de facto approval from the FCC.

The words "imminent approval" were heard in reference to the deal which has lingered on deal calendars for a longer amount of time than anything that can be considered imminent.

"I've been hearing imminent approval for 15 months now," said Janco Partners analyst April Horace.

"It'll eventually happen," she said, based on "the tenacity of the two companies" that she has observed.

The satellite radio operators are contending with poor auto sales and need every extra dollar they can find.

The companies are claiming that somehow "there's going to be $400 million of cost savings and synergies" after a combination," Horace said.

And "it should be accepted by the FCC," she said.

The positive news was not enough to defend the shares prices from the flailing market.

Shares of XM Satellite Radio (Nasdaq: XMSR) slipped by $0.34, or 4.34%, to $7.50.

Shares of Sirius Satellite Radio (Nasdaq: SIRI) inched up by $0.03, or 1.56%, to $1.95.

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