InBev to Busch: Let’s Make the “World’s Leading Beer Company”

by

Brew Blog

Would make Budweiser global flagship brand.

Best known as a ruthless cost-cutter, InBev CEO Carlos Brito is trying to turn on the charm as he makes a $46 billion unsolicited bid to acquire Anheuser-Busch.

Brito, in communications with the public and A-B CEO August Busch IV, has said that InBev would make the A-B organization and brands essential parts of the combined entity — going so far as to rename the company to “evoke the heritage of (A-B’s) key brands” (InBusch? InBud?) and make Budweiser the company’s global flagship brand.

The question is, will it work or will the deal get hostile?

Recall that August IV told A-B distributors that A-B would not be sold on his watch. And in a memo to distributors — reported by Beer Business Daily — August IV suggested A-B was not going to rush to make a decision.

From BBD:

He also writes that when a “public company receives an unsolicited proposal” the review process could “take months or, in some cases longer…..There is nothing you should be doing, other than continuing to focus on business as usual.”

While Busch speaks of “months or, in some cases longer,” Brito, in a June 11 letter to Busch discussing proposed terms for a deal, appeared to have a bias for moving quickly:

We would like to arrange a meeting promptly with you and your representatives to discuss all aspects of our proposal and answer any questions you may have. Now is the time to make this compelling combination a reality.

Brito wrote the letter to follow up on a previously undisclosed June 2 meeting between Busch and two InBev execs. At the meeting Busch asked whether InBev had a formal offer.

Ultimately A-B’s fate will be decided by shareholders who will have to judge whether Brito’s vision of the “world’s leading beer company” is more compelling than A-B as a standalone entity. In his letter to Busch, Brito said he saw opportunities to leverage InBev’s international footprint to drive Bud’s international growth and noted A-B and InBev’s successful collaboration in Canada, South Korea and the United States.

CNBC reported on Wednesday that InBev “believes a there’s a large enough constituency of frustrated shareholders in Anheuser-Busch to bolster their attempt to get a deal done.” And a recent Reuters report quoted several large investors who said they’d be open to a bid.

In his letter to Busch, Brito said InBev’s intent would be to make A-B and its brands an integral part of the organization. St. Louis would be home to the North American headquarters, all the breweries would stay open and some A-B directors would be invited to the new board.

From the letter:

We have the highest respect for Anheuser-Busch, its employees and leadership, as well as the generations of investment that have created the Anheuser-Busch brands, particularly the iconic Budweiser brand. We hold your management’s marketing and sales capabilities in great esteem and hope that the combined company will be able to draw on their collective expertise. We also recognize the great contribution of your wholesalers, many of whom are now entrusted with our European import brands in the US, to this achievement.

Whether Brito’s words will be enough to sway Busch remains to be seen. But it’s clear that InBev wants to get the deal done.

“This matter has the highest priority for InBev,” says the close of the letter. “I look forward to hearing positively from you shortly.”

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