Thursday, 17 July 2008

A-B/InBev Reaction and the Rational Voter

Art Carden at the Mises Institute blog has some comments on InBev's purchase of Anheuser-Busch:
The public reaction to the takeover exhibits the voter biases identified by Bryan Caplan in his 2007 book The Myth of the Rational Voter: anti-market bias, anti-foreign bias, make-work bias, and pessimistic bias...
He goes on to enumerate and explain each fallacy in more detail. In the end, as he points out, the consumer will benefit:
The $70 per share price offered by InBev suggests that the company feels they can better satisfy consumer wants by combining the companies and rearranging their inputs, so much so that they were willing to pay a premium for Anheuser-Busch stock. InBev's shareholders may very well be incorrect. Only time will tell, and time's message will be crystal clear on the new company's balance sheets and income statements.

1 comment:

Admiral said...

This is really the glory of M&A... something I more and more realize I want to practice.

Even better, mergers often lead to a decrease in unit costs which may mean lower prices for consumers. I don't know enough about the beer industry to comment confidently on the prospects for this... but I am excited to see what AB-InB comes up with. InBev itself being a product of recent mergers, they seem to have a solid, consistent vision that they are acting on. I'm expecting big things.

Also, props for linking to the Mises Institute, LOL.