Inbev's Acquistion of Anheuser-Busch
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Case Code: BSTR415 Case Length: 16 Pages Period: 2008 - 2012 Pub Date: 2012 Teaching Note: Not Available |
Price: Rs.500 Organization: Anheuser-Busch InBev N.V. Industry: Beverages Countries: Belgium, Brazil, USA, Global Themes: Business Strategy |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
The Bidding War
Anheuser had been facing operational challenges since the mid-2000s. Analysts pointed out that though the company owned one of the world's best selling beer brands, it had grown only through its international expansions and that since 2003, the company had not witnessed any growth in revenues in its existing markets. It was at this stage in June 2008 that InBev made an unsolicited offer to acquire Anheuser. InBev made an initial offer of US$ 46.3 billion, valuing each share of Anheuser at US$ 65. But the Anheuser board rejected the offer saying it undervalued the company and also failed to take into account its 'Blue Ocean' cost-cutting initiative. The board said it was open to proposals which added value to the existing shareholders...
The Final Deal
The shareholders of Anheuser voted in favor of InBev's takeover deal for $52 billion equity value. InBev also received all necessary regulatory clearances. Prior to the takeover, InBev also signed an agreement with the US department of Justice stating that it had sought permission from the Department relating to certain concerns over the beer sales . After this, Anheuser became a wholly-owned subsidiary of InBev. "Together, A-B and InBev will be able to accomplish much more than each can on its own. We have been successful business partners for quite some time, and this is the natural next step for us in an increasingly competitive global environment. This combination will create a stronger, more competitive global company with an unrivaled worldwide brand portfolio and distribution network, with great potential for growth all over the world," said Brito...
The Rationale
The new combined entity was headquartered at Leuven, Belgium, and functioned under the leadership of Brito. The combined entity expected to garner sales of US$ 36.4 billion per year, equivalent to 46 billion liters of beer annually. It had a portfolio of over 200 beer brands including flagship brands like Budweiser, Stella, Artois, Bud Light, Brahma, Michelob, and Jupiler among several others. With a presence across 23 countries around the world, the company employed 114,000 people. Speaking about its global expansions, the company stated that, (the) "expanded company will be geographically diversified, with leading positions in the world's top five markets -- China, U.S., Russia, Brazil, and Germany and balanced exposure to developed and developing markets."...
The Aftermath
Immediately after the takeover in November 2008, the company reported a 95% fall in its three months profits. Analysts predicted uncertainties stating that ABInBev's integration could be more time consuming and costly than expected. They also opined that the revenue synergies and cost savings from the merger would not be fully realized within the expected time frame of two years. The integrated company as a part of its cost saving plans removed almost 2400 employees during the integration process in 2008. The company sold its assets worth US$7 billion and used it for repaying the loan taken for the takeover...
Exhibits
Exhibit I: Major Products and Brands of Anheuser Busch
Exhibit II: Year-wise Acquisitions Made by Interbrew from 1999 to 2004
Exhibit III: Major Products and Brands of InBev
Exhibit IV: Income Statement of InBev
Exhibit V: Income Statement of ABInBev
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