Tuesday, 17 June 2008

Battle for Budweiser

Anheuser-Busch goes south of the
border to keep free from InBev

Giant American brewer Anheuser-Busch is seeking a merger with Modelo of Mexico in a frantic attempt to keep free of the clutches of the world's biggest brewer, InBev. InBev, itself a merger of Ambev of Brazil and Interbrew of Belgium, has offered $46 billion in a hostile bid for A-B, owner of the world's biggest beer brand, American Budweiser. InBev's rush to buy A-B means it will take on around $40 billion of debt, with vast loans from banks, including Santander of Spain.
A-B already owns 50% of Modelo, best known for the "lime-in-the-neck" lager Corona. Last year, 42% of Modelo's sales came from exports to the United States and A-B says it will use its muscle to grow that share if the companies merge.
In an extraordinary letter, Carlos Brito of InBev wrote to A-B boss August Busch on 15 june, saying: "We have read the recent reports suggesting you may approached Grupo Modelo regarding a possible transaction between A-B and GM. In light of the reports, we believe it is important for you and your board to u dnerstand that our proposal to combine with A-B by means of acquiring all A-B outstanding shares for $65 per share in cash is made on the basis of A-B's current assets, business and capital structure. Accordingly, we would expect that prior to proceeding with any alternative transaction, especially if your shareholders will not be given the opportunity to vote on it, you would first fully explore our offer and the potential adverse consequences any such transaction could have on the ability of your shareholders to receive our premium offer."
There is no velvet glove in site in this takeover battle: it's all bare knuckleduster. Observers in New York say that even if A-B did fully merge with Modelo, this would not stop InBev coming back with an even bigger offer for the enlarged group. InBev is prepared to deepen its borrowing for achieve this.
*It may be brass knuckledusters at the top of the industry but it's tongue-in-cheek lower down the pecking order. Tony Jennings, who runs Budweiser Budvar UK, the London operation for the Czech brewer, has expressed his full support for Anheuser-Busch in the American company's struggle for independence. Bet that made Augie Busch feel a whole lot better in his office in St Louis!

2 Comments:

Blogger Zak said...

Extraordinary. It seems as though InBev will just roll up with as much cash as it needs, and acquire whatever is available. I can't see the shareholders caring much beyond a fat payout, but it would be nice to see a bit of a fight.

17 June 2008 at 23:29  
Blogger theculinarybrewer said...

I dont really think it will effect the consumer too much. Its just two evils joining forces! Anyhow, I had an interesting Bud experince recently. You can read about it here. (The Beer Diary)

30 July 2008 at 14:24  

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