Call me when they make something as good as what these guys produce:
Posted on 07/16/2008 12:24:49 AM PDT by Schnucki
S IN an old-fashioned Western bar brawl, Anheuser-Busch tried to hit InBev with anything that came to hand. The American brewer was attempting to rebuff an assault by its Belgian-Brazilian rival, which had offered $46 billion in an unsolicited bid on June 11th. Anheuser-Busch tried to use the business equivalent of a bar stool over the head—a lawsuit claiming that InBev had misled investors. The American firm even dealt the low blow of citing InBev’s Cuban businesses as a reason to reject the bid.
These tactics came to nothing, however, after InBev opened its wallet and upped the offer to $52 billion, which Anheuser-Busch gratefully accepted on Sunday July 13th. In fact InBev had been prepared to fight sneaky too. In an effort to outflank the founding Busch family (which owns only 4% of the company’s shares) it used family disagreement. The bidders proposed a new board of directors that would include Adolphus Busch, the uncle of August Busch, the existing chief executive of the American firm who was dead against the merger. Adolphus promptly urged Anheuser-Busch to accept InBev’s offer.
Anheuser-Busch had come up with its own cost-cutting plan to counter the offer from InBev. But that was no match for Inbev’s hard cash, particularly after it agreed to raise its offer to $70 a share. Agreeing to the deal at this price is probably a better outcome than dealing with a long and distracting hostile bid. The deal is a good one for many reasons.
Big brewing mergers of late have been driven by two differing goals. The recent acquisition of Britain’s Scottish & Newcastle by Carlsberg and Heineken niftily encapsulated both. Heineken got its hands on S&N’s operations in Britain and elsewhere. As in America and other countries where the beer market has matured, growth is slow or non-existent. Here brewers can crunch together operations such as management and distribution, so cutting costs and boosting profits. The merging of the American operations of SABMiller and Molson Coors last year was driven by the same motives.
The other way to grow bigger profits is by acquiring businesses in emerging markets where beer drinking has boomed. Carlsberg’s side of the deal saw the Danish brewer get its hands on BBH, a joint venture with a Russian brewer.
A sensible brewer keeps a foot in both camps. Mature market brewers such as Anheuser-Busch, can be fantastically profitable, even if growth is negligible and handy targets are in ever shorter supply. In emerging markets demand is volatile and margins are slim. Growth in beer drinking in these new markets has suffered as food prices have spiralled. The rising prices of beer’s main ingredients (barley for the drink, aluminium for cans) have cut margins slimmer.
InBev, by buying Anheuser-Busch, will insulate itself against the volatility of emerging markets—over a half of its profits come form its Latin American operations. Although there is little overlap with operations in America (unlike Molson Coors and SABMiller) Anheuser is generally reckoned to be ripe for some cost cutting. Although InBev pledged that no brewery closures would take place, it wants to make savings of $1.5 billion by 2011, which suggests some workers will go. InBev reputation for ruthless efficiency could also mean that Anheuser-Busch’s famous Clydesdale horses are put out to pasture.
The merger of the world’s number two and number three brewers by volume will create a combined company with more than $36 billion in annual revenues and a better negotiating position with suppliers of expensive ingredients. The two will also gain extra traction in China with their combined operations. The beer market there is enticing because of rapid growth, but it is also highly fragmented and hard for big western brewers to crack.
Maybe now we can get some Bud that doesn’t taste like it was processed through a horse.
I don’t like the idea of our American brewer, up till now proudly run by its founding family in St. Louis, being bought by an international thing called “InBev.” Some people got some money, but something is lost there.
InBev reputation for ruthless efficiency could also mean that Anheuser-Busch’s famous Clydesdale horses are put out to pasture.
I’m sure there are plenty of people who’d be willing to adopt them.
At least Anheuser wouldn’t be processing beer through them any more.
Even if Bud goes away, I could care less. I don’t drink that horse urine they call beer, and having it go away will only encourage other brewers (with better product) to step up.
I never could understand why people think that the mass produced fluid that the big brewerys make is worth anything? I find that the beers and ales produced by local brewers far superior to anything produced by a national or internation firm.
I drink at Smig’s and Willy’s and find that there products are far and away better than you can get in a bottle or can.
Both are outlets for the same brewer. Its the only place you can get their ales or beers. There are several good microbrewerys around here
Slick commercials don’t make the horsepiss taste any better.
Support your local microbrewer.
This morning’s news announced that InBev wants to sell off Bush Gardens theme parks and possibly other holdings to recoup it’s money.
Real economic geniuses at the “Economist”...
Those “tactics” obviously got 6 billion more dollars out of the buyer...
Right - Budweiser is an American beer, and everyone know that anything European is superior to anything American. < /barf>
Call me when they make something as good as what these guys produce:
By the way, you are aware that Bud was originally a Czech beer, not American, right?
I guess that means Shamu is on the block too
I hope this doesn’t affect my father’s pension. It shouldn’t, but good grief I don’t want to deal with having to learn a whole new system from a new managing company.
And it begins...
Tampa will love the loss of tourist dollars that idea will bring.
The Unions at Bud will find that their days are numbered. I went on a St. Louis Bud tour. They seem to need half the plant there to produce enough beer for sales. Costs could kill the St. Louis plant.
It’s a dark beer, I like that better than lighter beers. I like Bass Ale, but it’s a British beer and not easy to find outside of snooty bars. Does Shiner taste anything like the darker ales?
Amen again ... Shiner is real good stuff, and they make it just up the road from me. But before anyone gets around to touting Samual Adams over Bud, be it known that Bud owns S.A. so it’s future may be in doubt also. I haven’t checked to see if any other ‘micros’ were owned by Bud.
Haven't tried it yet...
But the color's right. "Never drink anything you can read a paper through!"
It's always been American. The original Augie Busch tasted Pilsner beer in the Czech town of Budweis and adopted the name when he began brewing an American version of the beer.
They won't shut the park down, no money in that. They'll sell it to someone.
True.
Hey, I guess that means that when the deal goes through my own local Boulevard Brewing company will be the largest beer producer headquartered in Missouri. We’re number 1! We’re number 1!
Benjamin Franklin
Damn straight!
Brewing a full-bodied beer with lead is an art that western brewers haven't learned yet.
While I’m a big fan of the smaller brewers/ micro brewers, you can do MUCH better than Shiner.
Homer Simpson
Life is too short to drink anything but Guinness Stout.
I prefer Guinness Draft myself and last night I had some Newcastle brown ale, but the topic is good beer in America by American brewers, not English beer. There are plenty of good American brewers around. When I visit an area, I always make sure to identify the local micro brews and sample as much as possible.
So much beer; so little time....
I don’t know what horse piss taste like. I bow to your superior experience.
No, it was originally an American beer, only the name came from there.
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