Let us drink to Budweiser before it goes all Belgian on us (and US)

by Barbara Murray, May 29th, 2008, 7:00 am

Do you suppose August Busch IV will be pulling up a stool with the other CEOs/chairpersons/heirs-to-the-family-fortune at an imaginary get-together in a dusty old corner tavern to drink to their multi-billion-dollar deals? Will he join these other recent sellers of giant companies and drink to the money they’ve made? Will Busch IV and the others also drink to the demise of the American family business dynasty? They probably should, at least to the former.

Here’s a short round-up of recent dynasty-related acquisitions: Wrigley sold its iconic gum company to candy company Mars; the Bancrofts sold Dow Jones (and with it, The Wall Street Journal) to Rupert Murdoch; and Carlsberg and Heineken have just taken over, dismantled, and divvied up the UK’s oldest brewer, Scottish & Newcastle. The beer arena has examples of other takeovers of family-owned and -run companies as well: South Africa’s SABMiller snagged Milwaukee’s finest, Miller Brewing, and Canada’s Molson bought out that mellow Denver brew, Coors (creating the not very creatively named Molson Coors Brewing Company). There are others but you get the drift — consolidation is all, especially in the beer market.

To this end, it sure looks like little Auggie Busch will be joining our group of seller (sell-outs?) for a drink. Rumors, reports, and Reuters are rife with talk about the sale of Anheuser-Bush to InBev. InBev? What’s that? Not a household name in this country (yet), InBev is a large Belgium brewer with operations in some 30 countries. It produces and markets some 200 beers throughout the world and makes some pretty well known quaffs you’ve probably quaffed — Beck’s, Stella Artois, Brahma, and Labatt, to name a few.

[Reader note: Instead of using past perfect, pluperfect, and other awkward tenses, let us assume this is a done deal, thus freeing us to use and read less convoluted verbal constructs: So, instead of, "August Busch IV is said to have rejected," let us say instead, "August Busch IV has so far rejected ..."]

As of this writing Busch IV has rejected InBev’s $46 billion offer to buy out his family’s legacy. Ever mindful of his father (Busch III) and all the Bs before him, not to mention his hometown of St. Louis, and perhaps even his company as an edifying example of the American Dream, Bush IV and A-B itself remain silent on any deal. InBev officially remains silent as well.

But $46 billion. It is a sum not to be sneezed at. Just what would Anheuser get for this tidy sum? Well, considering the flat sales in the mature US beer market, A-B would leverage InBev’s global and emerging market platforms, as well as its manufacturing, cost-saving, and scalability synergies. In short, A-B would probably see an increase in its bottom line.

And InBev — again, given the sluggish US beer market — what would it get? Given that some of its most successful operations are in Canada and South and Central America (through its Brazil-headquartered AmBev subsidiary), the company badly wants into the US market. What better way than to acquire Anheuser-Bush’s well established distribution system? InBev could market its more upscale beers in the US and do the same with Budweiser in its emerging (and already-emerged) markets.

It sounds like a pretty good deal all around. But the thought arises — will the Clydesdales now be draped in the black, red, and gold of the Belgian flag? I don’t even want to contemplate the Super Bowl ads.