Financial thoughts

No. 2 U.S. beermaker SABMiller’s (SAB.L: Quote, Profile, Research) move to combine American operations with No. 3 Molson Coors (TAP.N: Quote, Profile, Research) will likely be approved even though it will increase market concentration, antitrust experts said.

The approval may be a reflection of how much easier it has become for companies to merge under the Bush administration, antitrust lawyers said.

“I would frankly expect that they will (get approval), in part because it’s the Department of Justice,” said Ben Sharp of Perkins Coie LLP, reflecting a view among some experts that the department challenges few mergers.

“I doubt very much that it would have got approval under the Clinton administration,” Sharp said.

Michael Keeley of Axinn, Veltrop & Harkrider, LLP agreed: “I’d be stunned if they did anything to stop this deal.”

Anheuser-Busch (BUD.N: Quote, Profile, Research), which brews Budweiser, Busch and Michelob, is the longtime U.S paydayloans. market leader with just under half of all U.S. beer sales. Miller holds 18.7 percent of the market and Coors 11 percent, according to Michael Scherer, who teaches management at Harvard’s Kennedy School of Government. The rest of the market is shared by imports and microbrewed beers.

The proposed merger would give Anheuser-Busch and the new MillerCoors joint venture control over nearly 80 percent of the U.S. beer market.

According to the Herfindahl-Hirschman Index used by antitrust experts, the U.S. beer market is already concentrated and the joint venture would push the index up by more than 300 points. Deals that raise the index by more than 100 points in concentrated markets “presumptively raise antitrust concerns,” according to the Justice Department’s merger guidelines. 

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Retail stocks fell on Thursday as analysts said a proposed $150 billion U.S. economic stimulus package aimed at averting a recession will provide little relief for struggling retailers and cash-strapped consumers.

The White House and Congress reached a tentative deal that would grant individuals a maximum rebate of $600 and married couples up to $1,200, plus $300 per child. House of Representatives Speaker Nancy Pelosi, a Democrat, vowed further action if needed to boost the economy.

With consumers grappling with high debt, rising food and fuel costs, and negative savings, the proposed stimulus package would not do enough to spur flagging consumer spending, said Howard Davidowitz, chairman of New York-based retail consulting firm Davidowitz & Associates Inc.

“Everybody recognizes that the stimulus is not going to do anything on a permanent basis. It’s just a drop in the bucket,” he said.

“When you look at someone who’s put nothing down on a house and now has negative equity, do you really think this addresses any of these issues?”

Retail stocks, meanwhile, lost some of the gains made following the Federal Reserve’s move on Tuesday to cut the fed funds rate by 75 basis points.

The Dow Jones U.S credit scores. Retailers Index .DJUSRT fell 1.5 percent while the Standard & Poor’s Retailing Industry Group Index lost 1.2 percent.

Shares of Wal-Mart Stores Inc (WMT.N: Quote, Profile, Research) closed 2.4 percent lower. Family Dollar Stores Inc (FDO.N: Quote, Profile, Research) fell 5.4 percent, Circuit City Stores Inc (CC.N: Quote, Profile, Research) was off 1.4 percent and Target Corp (TGT.N: Quote, Profile, Research) dropped 2.7 percent. 

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Countrywide Financial Corp on Tuesday denied market speculation it might seek bankruptcy protection, after shares of the largest U.S. mortgage lender slid to their lowest level in nearly eight years.

“There is no substance to the rumor that Countrywide is planning to file for bankruptcy, and we are not aware of any basis for the rumor that any of the major rating agencies are contemplating negative action relative to the company,” Countrywide said in a statement.

Countrywide shares pared earlier losses following the statement. In afternoon trading, the stock was down $1.05, or 13.7 percent, at $6.59 on the New York Stock Exchange. It had earlier fallen nearly 25 percent to $5.76, its lowest level since March 2000.

Like many U.S. mortgage lenders, Countrywide has struggled with the nation’s housing slump.

Borrower defaults have soared as falling home prices and tighter credit markets led it stop making many of its more profitable home loans.

The refusal of many investors to buy all but the safest mortgage has led to write-downs of loans on its books.

On October 26, Calabasas, California-based Countrywide posted a $1.2 billion third-quarter loss, but said it expected to be profitable in the fourth quarter.

Chief Executive Angelo Mozilo said at the time he also expected Countrywide to survive the credit crunch free credit report .com. Mozilo co-founded Countrywide in 1969.

Bank of America Corp (BAC.N: Quote, Profile, Research) injected $2 billion into Countrywide last August. Countrywide later set plans to lay off as many as 12,000 employees, or one-fifth of its workforce.

Countrywide is expected to disclose December mortgage lending activity as soon as Friday, and to report fourth-quarter results later this month.

(Reporting by Jonathan Stempel; Additional reporting by Kristina Cooke in New York and Doris Frankel in Chicago; Editing by Toni Reinhold)
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