Anheuser Busch InBev to gobble up the rest of Modelo?

International Megacorp Anheuser Busch InBev looks to be ready to take over the 49.6% of Grupo Modelo that it doesn’t already own. The deal should be about $15 billion. While ABIB owns the majority of shares, the Modelo families still hold the majority of votes.

Corona, of course, is the big draw here, and ABIB would save a lot by not needing a partner to import it. And let’s not forget the 2-3% annualized growth in the Mexican market. Sales of industrial brewed American light lagers have been in the doldrums for a few years now.

Corona beer draws AB InBev to Modelo deal

Mexico is the world’s sixth biggest beer market and the fourth most profitable and is a virtual duopoly between Modelo and Heineken. Analysts say it would be a good strategic deal for AB InBev.

Analysts said AB InBev taking on the import rights for Corona beer in the U.S. could cause anti-trust
Corona is currently imported into the U.S. through a joint venture with Constellation Brands in an agreement which runs until 2016, and if AB InBev wanted to break this deal early then it would have to pay Constellation compensation.problems in the U.S. because of its high market share, but said it could get around this by selling off some of its smaller beer brands.

I expect the deal to go through, since it will only require a few minor brands be sacrificed. Who’d possibly miss them, right?

I just can’t help thinking that instead of buying out another megabrewer (and quasi-competitor) wouldn’t it be better if they took that $15 billion and used it to make better beer?

Are big beer mergers good for craft brewers?

Speaking of Heineken’s purchase of FEMSA, Public Radio’s Marketplace had a story on how consolidation of brewing giants can help craft brewers.

Marketplace: Are beer mergers a good brew for biz?

Uli Bennewitz owns the Weeping Radish Farm Brewery in Jarvisburg, N.C. He also runs a butchery and an organic farm.

Everybody is wary of “where does this stuff come from?” There is clearly a move towards local, local, local. And I think that is an advantage for small breweries.

They also follow up with a bit of analysis on the Marketplace blog:

Maketplace Scratch Pad: One world, one beer company?

Paddy [Hirsch] recently visited Stone Brewing Company near San Diego, and they told him they loved it when the big companies merged. The mergers turn off beer-drinkers, perhaps in principle but also because something bad seems to happen to the flavor of a decent beer when it gets swallowed up by a mega-corporation. People start looking for alternatives.

Beer drinkers try to derail InBev / Anheuser-Busch deal

Just when I though I wasn’t going to write any more about InBev’s acquisition of Anheuser-Busch…

Apparently, ten regular drinkers of Anheuser-Busch products filed suit in St. Louis to block the deal on antitrust grounds.

Beer Drinkers Challenge InBev-Anheuser-Busch Deal

The suit, filed in Anheuser-Busch’s hometown of St. Louis, does not seek financial damages but asks a judge to block the deal. The Department of Justice often reviews large acquisitions to determine if they are legal under U.S. law. But attorneys behind the lawsuit said they want to halt the deal regardless of the verdict in Washington.

“The Justice Department can do whatever they want. They have no absolutely no effect on private actions,” said Joseph Alioto, the lead attorney in the case. He declined to say Wednesday who was funding the lawsuit.

George Will: Beer is essential

In his Op-Ed piece in the Washington Post two weeks ago, George F. Will used the (at the time) as yet unaccepted offer from InBev for Anheuser-Busch as seen in Investor’s Business Daily as a lead-in to meander from beer as a staple, to beer as essential to civilization, to beer and its role in natural selection.

The story asserted: “The [alcoholic beverage] industry’s continued growth, however slight, has been a surprise to those who figured that when the economy turned south, consumers would cut back on nonessential items like beer.”

“Non what“? Do not try to peddle that proposition in the bleachers or at the beaches in July. It is closer to the truth to say: No beer, no civilization.

The bulk of the piece discusses the research in The Ghost Map: The Story of London’s Most Terrifying Epidemic — and How It Changed Science, Cities, and the Modern World by Steven Johnson. More specifically, how alcohol, specifically beer, was necessary for civilization to grow. Alcohol has natural anti-bacterial properties (not to mention the long boiling necessary to brew killed plenty of “bugs” as well) and was safer to drink than the water.

He concludes that beer is very much essential.

George F. Will – Survival of the Sudsiest

I only had two problems with the article. One, the mugs of Budweiser in the accompanying photograph look so…weak. Okay, sure, it was appropriate to include A-B’s flagship beer, but my goodness it looks like it has no flavor at all.

The other issue I had was that Mr. Will unfortunately perpetuated the beer urban legend that Ben Franklin said that “Beer is proof that God loves us and wants us to be happy.” It just ain’t so.

It’s official: Anheuser-Busch InBev

$50 billion and you can become the world’s largest beer manufacturer.

Anheuser-Busch Agrees to Be Sold to InBev

The combined company is expected to be named Anheuser-Busch InBev, fulfilling a promise by the Belgian company to include the Anheuser name in the new brewer’s title, people briefed on the matter said. Anheuser will be given two seats on the board, including one for August A. Busch IV, the company’s chief executive and a scion of its controlling family.

When this deal is consummated, the three largest brewers in the U.S. will not be American-owned at all.

Job Cuts Inevitable For InBev-Anheuser

Gerard Rijk, an analyst with ING Financial Markets, said job cuts would happen particularly at the corporate level, as well as in the marketing and administrative departments. “The companies can merge their businesses in the UK, China and North America,” he said.

In response to concerns of job cuts, InBev, whose mostly Brazilian management team has a reputation for ruthless cost-cutting, promised to keep the headquarters of the North American division of the company in St. Louis and pledged that it wouldn’t close any of Anheuser’s breweries.

That $50 billion purchase price will require $45 billion in debt. Gotta pay off those loans somehow.

I guess if you want to drink an American light lager that’s truly American, Pabst is your beer. Or Yuengling. They’re #4 and #6 respectively of the top beer brands in 2007. Samuel Adams is #5.

Anheuser-Busch sells out at $70 a share

It is being widely reported this weekend that InBev has increased their offer to $70 per share for Anheuser-Busch, and that the A-B Board of Directors is prepared to accept the offer.

InBev had recently begun a campaign to unseat the current Board. But, apparently confident the deal will go through, InBev has already begun setting up the loans it will need to finance the deal.

Belgian brewer would pay $70 a share

An official announcement will probably be made Monday.

There are still plenty of folks opposed to the deal. Some, however, haven’t completely thought things through.

This Bud Might Not Be for Them

Jordan Moore took the news that his beloved Budweiser could soon fall into foreign hands very personally: He decided he would scrap his plan to get the logo of the King of Beers tattooed on his right rib cage.

“I’ll tell you one thing,” said the 21-year-old concrete worker during his lunch break at The Brick of St. Louis bar, in the shadow of this city’s storied Anheuser-Busch Cos. brewery, “if Budweiser is made by a different country, I don’t drink Budweiser anymore. I’ll go back to Wild Turkey.” (Wild Turkey, a Kentucky bourbon, is owned by French drinks giant Pernod Ricard SA.)

InBev logoI’ll bet he also shops at Wal-Mart, where just about everything in there is manufactured in China. (Except for some of the display racks. I know they’re made in the U.S. because my brother makes them.)

Expect there to be continuing resistance from political corners as well.

InBev Raises Its Offer for Anheuser-Busch

Anheuser’s about-face risks raising the hackles of Missouri politicians and customers who rallied to the brewer’s side as it sought to fight off the unwanted advances. InBev sought to head off criticism by promising to keep the combined company’s headquarters in St. Louis and to maintain “the Anheuser-Busch heritage” in the new entity’s name.

That did little to assuage Matthew R. Blunt, the governor of Missouri, who said he was “strongly opposed” to an InBev takeover of Anheuser. Last month, he requested a review of the offer by the Federal Trade Commission.

“I am concerned that this sale would have destabilizing impacts on our nation and state’s long-term economic interests,” Mr. Blunt wrote in a letter to the regulator. “I am opposed to this buyout and am asking you to conduct this review as quickly as possible.”

Anheuser’s political support crossed party lines. Mr. Blunt and Christopher S. Bond, Missouri’s Republican senator, were joined by two of the state’s top Democrats: the state’s other United States senator, Claire McCaskill, and Mayor Francis G. Slay of St. Louis.

Mr. Bond said, “InBev buying Anheuser-Busch is as popular in St. Louis as $4 gas.”

And perhaps just as inevitable.

Once again, it looks like the only winners in this deal are shareholders.

InBev is a persistent suitor

Maybe they need someone to take the role of Cyrano de Bergerac.

InBev Remains Committed to $46.3 Billion Anheuser Bid

InBev NV, whose bid for Anheuser-Busch Cos. was rejected by the Budweiser maker, repeated that it’s committed to its offer of $65 a share and would prefer a friendly takeover.

The bid reflects the “full and fair” value of the company, InBev Chief Executive Officer Carlos Brito said in an e-mailed statement today. The Leuven, Belgium-based brewer will pursue “all available avenues” to allow Anheuser shareholders to vote directly on the offer.

Meanwhile, A-B has already announced a reduction in its workforce, reduction in pensions, and an increase in the employee contributions for healthcare, all in an effort to cut costs and remain independent.

Anheuser-Busch says no, but plays coy

Yesterday, Anheuser-Busch’s Board of Directors rejected InBev’s unsolicited takeover offer. Saying that $65 per share was “financially inadequate”, the Board left open the possibility that a higher offer might sweep them off their feet.

Meanwhile, InBev has stated that it will ask A-B shareholders to dump the current Board. However, some analysts  think that the Belgian/Brazilian titan will sweeten its offer, perhaps as high as $75 per share.

InBev May Need $7 Billion More to Win Over Anheuser

Anheuser-Busch’s rejection of the offer yesterday was the board’s first response since InBev made its unsolicited proposal June 11. InBev said it preferred a friendly combination of its Bass, Beck’s and Stella Artois with Budweiser, while still pursuing an ouster of the board.

A purchase at the current price would be the biggest of a consumer company since Procter & Gamble Co. bought Gillette Co. for $57 billion in 2005.

While Busch told distributors in April that the company wouldn’t be sold while he was in charge, the family doesn’t own enough shares to sway a shareholder vote on the board. Directors and executives hold 4.5 percent of the company’s shares, according to a regulatory filing earlier this year.  

This corporate soap opera continues, with analysts figuring that any more than $67 per share will make the deal unprofitable for InBev. Additionally, A-B is not above dumping some divisions and implementing cost-cutting measures to boost its stock price.

Meanwhile, the fate of thousands of employees–who, in their own way, are beer lovers–hangs in the balance.

Tune in tomorrow for another exciting episode of Beers of Our Lives.

The InBev and Anheuser-Busch saga

The soap opera continues.

A-B courts Grupo Modelo to thwart InBev?

Saw this over at Brookston Beer Bulletin. Jay says it better than I could.

The Wall Street Journal is today reporting that Anheuser-Busch has entered into talks with Grupo Modelo about some sort of merger or acquisition in an effort to keep InBev’s takeover bid from becoming a reality. This is at least one of the strategies that had been floated in recent weeks and months for strengthening A-B. If you’re unfamiliar with Grupo Modelo, they are the largest brewer in Mexico, with nearly a two-thirds share of the Mexican market, and I’m sure you know at least one of their dozen brands: Corona. A-B already has a 50% stake in the Mexican beer company, but it’s non-voting stock and thus they have no control over the business. Today’s AP story regarding the InBev deal mentioned that InBev’s weak performance last quarter makes getting enough equity to complete the takeover possibly problematic, meaning that an A-B that also included control of Corona would be more expensive, which might be enough to kill the deal. Strap in folks, this is getting interesting.

You’re right Jay. It’s like a frickin’ soap opera.

A shout out to our friends across the pond: How is this playing out in Europe?