Short Stories

InBev: Under pressure to raise offer

Anheuser Busch considers that InBev's offer is undervalued, according to dealReporter today. InBev is offering USD 46.35bn for Anheuser. Neither companies are the target of short investors at present, with InBev having 2.6% of its Market Cap on Loan (%MCOL) to short sellers, and Anheuser has 0.26%. InBev paid a dividend yield on April 30th which is reflected in the short interest chart here, but as you can see there has been a general increase in short interest in the past year, from 1% in June 2007 to 2.6% today. In relation to the Market Cap, InBev's Utilisation (or the percentage of the available stock) is high at 28%. The Utilisation for the rest of the BEL20 is 17.6%, and for the rest of the EMEA Food, Beverage & Tobacco sector it is 9.1%. At 8%, Anheuser's Utilisation is higher than the rest of the S&P500's average of 0.59% and the North America Food Beverage & Tobacco sector of 0.59% too.

Manitowoc and Enodis

U.S. diversified manufacturer Manitowoc (MTW) has increased its offer for British kitchen equipment maker Enodis (ENO) to 1.08 billion pounds to trump a rival offer. Manitowoc said on Monday that it was offering 294 pence a share for Enodis, topping an agreed bid of 282 pence a share from U.S. rival Illinois Tool Works (ITW). Enodis shares rose 2 percent to 304 pence by 8.05 a.m, according to Reuters.

Enodis, who supplies companies such as Macdonald's (MCD) and Burger King (BKC) with fryers, has just 0.9% of its Market Cap on Loan (%MCOL) to short sellers. Utilisation is low 3.7%. As is typical of a bidder, Manitwoc, who is paying a dividend of on May 30th (as seen by the spikes; the last dividend was only 0.05% yield) has seen an increase in short interest over the past year. In May 2007, 0.6% of its shares were on loan, and this figure has now risen to 6.3% (please click to enlarge chart). Utilisation for Manitwoc is at 17%, so there is still plenty left to borrow if short investors believe that this bid price will grow up. The average Utilisation for the rest of the S&P500 is 7.6%, and for the rest of the North America Capital Goods it is 10%. For those wishing to close out their short positions in Manitwoc, there are 11.3 Days to Cover.