Inbev's Acquistion of Anheuser-Busch

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Case Details:

Case Code : BSTR415
Case Length : 16 Pages
Period : 2008 - 2012
Pub Date : 2012
Teaching Note :Not Available
Organization : Anheuser-Busch InBev N.V
Industry : Beverages
Countries : Belgium, Brazil, USA, Global

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"By combining with InBev, we have created a first-class international consumer products company and, without a doubt, the premier global brewer. Together, we will achieve our goals far more effectively than either company could on its own." 1

- August A. Busch IV, President and CEO of Anheuser-Busch, 2008.

"We are extremely pleased to announce the closing of this historic transaction. By bringing together these two great businesses, we have created a stronger, more competitive global company with a leading international brand portfolio and distribution network, and great potential for growth all over the world. We look forward to leveraging the operational and cultural strengths of both companies." 2

- Carlos Brito, CEO of Anheuser-Busch InBev, 2008.

Inbev Completes Acquisition of Anheuser-Buschion

In November 2008, Belgium-based brewer InBev SA (InBev) acquired American brewer Anheuser Busch Companies, Inc. (Anheuser) in what was considered to be one of the biggest cross-border acquisitions of the year. The Anheuser-InBev combination aimed at selling and distributing a joint portfolio of more than 200 beer brands, and becoming the market leader in the global brewery industry. Anheuser accepted InBev's offer of US$ 52 billion after a takeover battle that lasted more than six months.3 Under the terms of the proposal, InBev paid US$ 70 in cash for each share of Anheuser.

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About the acquisition, Carlos Brito (Brito), CEO of InBev, said, "Anheuser and InBev both have rich brewing traditions and a commitment to quality and integrity. We will succeed by celebrating and integrating companies' strong brands, heritages, and values and by incorporating the best practices of both to create opportunities for all of our stakeholders worldwide."4

Anheuser was the leading brewer in the USA and was also a leading manufacturer and recycler of aluminum cans. The company owned popular brands like Budweiser and Bud Light beers besides other popular brands such as Busch, Michelob, Natural Light (beer line), King Cobra and Hurricane (malt liquor line), and Bacardi Silver family and Tequiza (malt beverage line). InBev was the world's third largest brewing company by volume. Some of its well-known brands were Stella Artois, Brahma, Beck's, and Leffe.

According to industry observers, the Anheuser-InBev deal would unite the iconic brands of both the companies to create a global brewing giant. The deal would help create a global leader in the beer industry and would place it among the top five consumer product companies in the world. Forbes reported, "With a well-stocked brand portfolio of more than 200 beers including Budweiser, Stella Artois, Leffe, and Hoegaarden, the combined company will brew roughly a quarter of the world's beer and churn out $36.0 billion in annual sales, easily surpassing SABMiller, owner of Miller Genuine Draft, Grolsch, and Peroni brands, as the world's largest brewer." 5

Both the companies believed that the takeover would yield positive results, favoring the shareholders, consumers, employees, wholesalers, and business partners. The combined entity was expected to produce 460 million hectoliters of beer.6 According to InBev, the Anheuser InBev combination would result in US$1.5 billion revenue synergies annually. However, many employees of Anheuser in St. Louis were worried about job cuts as they felt that InBev would seek to cut costs and maximize profits. Consumers were concerned that the taste of Anheuser beers might undergo a change to suit the international consumers' palate. Some analysts felt that though InBev had grown inorganically over the years through acquisitions, the cross-border acquisition of Anheuser might lead to integration problems due to cultural differences. Analysts also opined that it would be a tough challenge for InBev to satisfy employees and consumers of Anheuser in the US. "There is always one giant tuna trying to swallow another one. A merger might look good on paper. But bringing these two companies together - and keeping them together - would be an extremely difficult prospect",7 said Tom Pirko (Pirko), head of consulting firm Bevmark.

Background Note - Next Page>>

1] "InBev Completes Acquisition of Anheuser-Busch," Press Release, AB InBev, November 18, 2008.
2] "InBev and Anheuser-Busch Agree to Combine, Creating the Global Leader in Beer with Budweiser as its Flagship Brand,", July 14, 2008.
3] William Spain and Steve Goldstein, "Anheuser-Busch Accepts $52 Billion InBev Offer,", July 14, 2008.
5] Melinda Peer, "InBev's Long-Brewing Bud Deal Complete,", November 18, 2008.
6] "Anheuser-Busch Confirms $46.4 Billion InBev Offer,", June 11, 2008.
7] William Spain & Steve Goldstein, "InBev, Anheuser-Busch rise on merger talk,", February 15, 2007.

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