bud

July 14 -- Dow 11,055 (down 45 points); trading range, 327 points

The third-largest bank failure in U.S. history made headlines after IndyMac Bancorp collapsed following a run on the bank.

An FDIC takeover of IndyMac attempted to keep operations as normal as possible, but doubts began to arise about other troubled regionals like Washington Mutual (later sold to JPMorgan Chase) and National City (now a part of PNC Financial after an October "take-under," where the company was purchased at a discount to its stock value).

But wait, there's more. After years of financial shenanigans and controversy, Freddie Mac (NYSE: FRE) and Fannie Mae (NYSE: FNM) were placed into conservatorship in a federal takeover of the government sponsored enterprises. This contributed to another slaughter in the financials, with 96% of the sector posting a loss for the session.

Oh, and if you wanted to drown your sorrows over an American-owned brew, scratch Budweiser off your list. Anheuser-Busch agreed to merge with Belgium's InBev for $70 a share, or $52 billion.

Greg Tucker is the executive editor of OptionsZone.com.

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Today was another one of those days where it was hard to tell if the market was up. The market gapped up and then posted a great morning rally, and then proceeded to give back most of the gains from noon until late in the afternoon. Housing was dismal, producer prices were down, and Bernanke and Paulson testified about the TARP usage.

Below are today's unofficial closing bell levels:
Analyst Calls: Top Upgrades and Top Downgrades

Anheuser-Busch Companies Inc. (NYSE: BUD) is no more..... The merger was completed today with InBev and the stock will now be European listed and be called Anheuser-Busch InBev. Shareholders of common stock receive $70.00 per share in cash as part of this $52 billion merger.

Corning Inc. (NYSE: GLW) gave disappointing LCD panel guidance which was "below" the $1.1 to $1.2 billion in revenues previously offered and "at the low end of below" the $0.20 to $0.28 EPS range previously offered just a few weeks ago. Shares were down 7% right before the the close.

Who knew that the fate of world beer would one day be in the hands of the beer faithful in Rochester, New York? The tastes of this blue-collar town, along with neighbors Syracuse and Buffalo, are key in the pending acquisition of Anheuser-Busch (NYSE: BUD) by Belgian giant InBev, SA. The three cities make up half of the U.S. consumption of Labatt Blue and Labatt Blue Light. Due to the popularity of Labatt brews and Budweiser brands in upstate New York, the U.S. Justice Department worries that beer prices might rise in Rochester.

So, if the acquisition is to be approved, giving Europeans control over America's iconic beer brands, InBev is being asked to sell the Labatt USA subsidiary. Other major InBev brands, including Stella Artois, Becks, and Bass, are not considered competitive enough in any markets to reduce competition between beers and provide upward pressure on prices.

Nope, it all comes down to Rochester and its surprisingly European tastes. Who would have thought?

The credit crisis has ruined a number of M&A deals, so why not the InBev transaction to buy Anheuser-Busch (NYSE: BUD) and create the world's largest brewer?

The problem may not be so far fetched. Most of the money needed to close the transaction is debt.

According to Reuters, "A banking industry meltdown and corresponding market volatility has already caused the Belgium-based brewer to postpone a $13.4 billion rights issue it planned in connection with the deal."

The InBev management may say that BUD is worth less now as the economy has faltered. The Anheuser-Busch board may not buy that. They like the $70 a share offer they have now. But, do they have any choice to take less? Maybe not.

BUD trades at $58, which means that some risk of problems with InBev are already in the stock. But, before word of the deal leaked, BUD traded below $50. If the board walks now, especially given how far the overall stock market is off, shares could drop well below $40.

Anheuser-Busch is trapped by the 40% drop in most of the equity indexes. Its shareholders are about to be hammered. Look for a deal to get done at $55. BUD don't have any leverage to do better.

Douglas A. McIntyre is an editor at 24/7 Wall St.

Stock futures dropped sharply Monday morning after the bailout plan was revealed Sunday and several banks in Europe were bailed out. U.S. investors are expected to react similar to stock markets around the word, which tumbled Monday following Washington's $700 billion bank bailout deal. The bailout may not be enough, and it will take a while to clean up the mess and restore confidence to financial markets. The economic reading due to be released today, August personal income and spending is not expected to affect markets much.

Three major banking bailouts were announced in Europe. 1) The Dutch-Belgian bank and insurance giant Fortis failed and was provided with a $16.4 billion lifeline by the governments of Belgium, the Netherlands and Luxembourg. 2) The British government nationalized mortgage lender Bradford & Bingley -- the second British bank to be taken under government control this year. 3) A consortium of German banks and regulators bailed out Hypo Real Estate Holding AG, in a deal worth billions of dollars.

Wachovia Corp. (NYSE: WB) - after WaMu's failure, the focus has shifted to Wachovia and at least two major banks, Citigroup Inc. (NYSE: C) and Wells Fargo & Co. (NYSE: WFC), were reportedly in talks Sunday to buy it. Wachovia shares are trading down 60% to $4 in pre-market action. C and WFC shares are down over 6.5% and 3.5% respectively in pre-market trade.

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A friend of mine was part of the team that worked on an acquisition for InBev, which is the mega Belgian beer company. He was impressed with the company's merger skills and had little doubt the transaction would work.

Well, global investors are impressed too (which is no easy feat in this tough global economic environment). In fact, according to a piece in the Wall Street Journal (subscription required), it looks like InBev is effectively managing the $45 billion in debt financing for the acquisition of Anheuser-Busch (NYSE: BUD).

No doubt, this is a complicated process. After all, InBev has organized a syndicate of top banks, which include Deutsche Bank, JP Morgan (NYSE: JPM), Barclays Capital, Royal Bank of Scotland, ING Bank, Banco Santander, BNP Paribas, Fortis, Bank of Tokyo-Mitsubishi and Mizuho Corporate Bank.

For the most part, the senior management team at InBev understands the global financial world (keep in mind that there is a deep bench of former investment bankers). Besides, the company has been diligent with maintaining a strong credit rating, which helps to minimize the financing risk.

In other words, to get a big deal completed nowadays, the quality needs to be top-notch. And, for the most part, InBev fits the bill.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

For financial markets, August is always a slow time as Wall Streeters head for their vacations. But this year, there was more than just seasonality. Simply put, it was a very tough month for M&A operators.

In fact, according to Reuters, August was the worst month since 1992.

It's been about a year since the credit crunch started, and it looks like things aren't getting better. If anything, it's a good bet we'll continue to see volatility and layoffs in the financial services space.

In August, the M&A volume in the U.S. came to about $28.5 billion, which is 53% off from the same period a year ago.

Ironically, while private equity funds have a huge amount of capital to put to work, there is not much bank financing. As a result, most of the private equity deals have been fairly small (below $2 billion or so).

Also, some of the recent mega deals – such as InBev's $45 billion acquisition for Anheuser-Busch Cos. (NASDAQ: BUD) – are crowding out the financing market.

In other words, investment bankers may need to wait until next year for things to warm up again.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

The stock market was down yesterday and it is down again today. Bearish sentiment is roaming through Wall Street right now, so I thought I would look back on another occasion when the market was going through similar turmoil and I wrote about the following eight stocks, which I thought would be "safe havens" in such a storm.

Six of the eight did well and two did not, and of course one of those two was a disaster. Among the losers, I do not think anyone is fretting about UPS, which is still one of the few triple-A rated companies along with Berkshire Hathaway. It has been well reported that the slowing economy and higher fuel prices have been the major culprits affecting UPS's earnings. In the case of WaMu, it's demise has also been well reported, but at the time I recommended it WaMu had a stellar reputation of growth and high yield for over two decades. There is no hiding, it turned out to be a lousy pick and an ANTI-SAFE Haven

NOT SAFE:

United Parcel Service (NYSE: UPS) closed Monday at $65.30 down from $78.40; a 16.71% loss

Washington Mutual (NYSE: WM) closed Monday at $4.21 down from $45.50; a 98% loss.

Fortunately the remaining six picks have done very, very well. If you had bought the pool, the average gain over the last two years would have been 7.14%. Adding the dividends over the two years would have raised this to 13.14%.

For hungry Wall Street investment bankers, the $45 billion merger of InBev and Anheuser-Busch Cos. (NASDAQ: BUD) is a nice relief. Yes, it means lots of juicy fees.

Another big winner is Busch IV (the CEO of Anheuser). Apparently, he is negotiating a consulting agreement that may exceed $10 million (there will be a $120,000 monthly retainer through December 31, 2013).

But according to a piece in Reuters, the transaction may have a dark side. Simply put, it hasn't been easy to raise the debt financing. As a result, this may crowd out some of the financing of other M&A deals.

The high rates on the InBev financing is likely to push up other debt costs on other pending transactions. What's more, there will be a flood of bond issuances on the market, which will put further pressure on the debt markets.

In other words, we may see a slowdown in M&A activity for the rest of the year -- except for those buyers that have substantial balance sheets.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

The credit crunch should be bad news for investment banks, right? Not necessarily. After all, strategic buyers have been aggressive lately, perhaps because there's not much competition from private equity operators.

One of the beneficiaries is Lazard (NYSE: LAZ), which reported its Q2 numbers. Eearnings came to $64.6 million, or 54 cents per share, which compares to $61.5 million, or 53 cents per share in the same period a year ago.

Simply put, Lazard has been snagging some choice client engagements. For example, Q2's revenues on merger assignments spiked 37% to $225.1 million.

In fact, the firm is an advisor on InBev's $52 billion deal to purchase Anheuser-Busch Cos. (NYSE: BUD). Another high-profile assignment is Gaz de France's 44.6 billion euro deal with Suez.

Keep in mind that Lazard has worked on about $100 billion in announced deals in July alone. This is certainly a nice momentum boost.

Besides, Lazard has a strong restructuring division. While the business is still fairly small – at $32.7 million – there should be lots of potential for growth. Just look at some of the major bankruptcies lately, such as Mervyn's, Steve & Barry's, Linen 'n Things and so on.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

Stock futures were higher this morning, indicating stocks could have a positive start to the session as oil prices continued to decline, sinking below $127 a barrel. Weekly inventories numbers reported later today could have an impact on oil prices. Then there is continued optimism in the financial sector, which caused the rally Tuesday. Also, a bill aimed at helping the housing market will reach the House floor. But once again earnings will likely have investors' attention with Costco already giving a profit warning.

Costco Wholesale Corp. (NASDAQ: COST) shares are plunging over 8% in premarket trading after the wholesale retailer warned its August-ending quarter's profit would miss analyst estimates. This is most surprising as Costco had been one of the retailer that seemed to have benefited from consumers trying to save and buy lower-cost items. But Costco blamed the lower profit on rising energy costs, saying it will earn less than $1 per share.

TheStreet.com's Jim Cramer says the biotechs look sweet in a bank-led slowdown.

Thank you, New York Times. Remember just a couple of weeks ago, when The New York Times wrote about how Genentech's (NYSE: DNA) (Cramer's Take) Avastin was too expensive and the stock got cracked down to $77? I know Roche did. I bet that was the last draw. The dramatic decline in the dollar plus a sentiment that has spawned a thousand articles -- that life-saving drugs cost too much -- gave the Swiss giant a chance to bolster its own anemic pipeline by buying what may be the greatest wonder drug of all time in its $43 billion bid, no doubt the beginning price for what will ultimately be a deal close to $100 a share. (I pushed DNA hard here and on "Mad Money" because I have been a huge believer in Avastin and I'm confident that people will pay anything -- or family members will pay anything -- for the hope of three or four months or more of life, or the chance of beating cancer altogether.)

I don't even know where to begin about the positives of this deal. First, it confirms the general trend: the dollar is so weak that it is worth buying anything that's name-brand if you are from Europe, including Anheuser-Busch (NYSE: BUD) (Cramer's Take), a total creature of the weak dollar.