This Bud’s for EU

14 July 2008



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Anheuser-Busch Takes InBev’s $52 Billion Offer

America’s biggest brewer, Anheuser-Busch, is going to be owned by Belgium’s brewer InBev, SA. Having initially rejected the European overtures, the board of Anheuser-Busch yesterday decided to accept a sweetened offer of $52 billion or $70 a share. That’s $5 more per share than stockowners were offered in June. This isn’t over, though.

First off, there are a bunch of Missouri politicians who believe that the St. Louis-based brewer ought to remain a stand-alone to continue making Budweiser, Michelob and Busch. There are 6,000 employees of the brewery there, and that means there are a lot of jobs, hence votes, at risk. They will need to be convinced that flip-flopping on the issue is worth it. And AB’s board has already said there are pension and healthcare benefit cuts coming.

Second, Anheuser-Busch owns 50% of Mexico’s Grupo Modelo, makers of Modelo Negro, but as part of the deal that gave the Americans that half, Modelo says it gets approval rights to the takeover. The Mexican brewery issued a statement earlier today that read, “Our agreement with Anheuser-Busch was carefully constructed to ensure we have a definitive say in who our partner is. We are confident that our agreement, which is governed by Mexican law, gives us the right to decide whether or not to consent to the potential acquisition of Anheuser-Busch by InBev.” However, Modelo and InBev have been talking about this possible buyout, so perhaps this is not a concern.

Finally, there are the nationalists who think that having Bud owned by “furriners” is the end of civilization. CNN reported that two websites have sprung up, “SaveBudweiser.com claims to have more than 60,000 signatures from merger opponents. SaveAB.com hosted a recent anti-merger rally that drew hundreds to downtown St. Louis.” If this can be used as a lever on the politicos, anything could happen.

Nevertheless, the InBev-AB deal creates only the second biggest brewer in the world. SABMiller is bigger, and Miller was sold to the South African Breweries (hence the SABMiller name) with little complaint. InBev wants to compete with SABMiller more evenly in the emerging markets, and Budweiser is a brand that can help do that. Still, one hopes they can start off by making Budweiser taste more like Stella Artois and less like water.

© Copyright 2008 by The Kensington Review, Jeff Myhre, PhD, Editor. No part of this publication may be reproduced without written consent. Produced using Fedora Linux.

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