InBev might face credit crunch, backlash over A-B bid
Okay, InBev is huge — the world’s largest brewer by a comfortable margin, with a balance sheet boasting lots of equity to fund possible takeovers.
But as rumors swirl around the Web that InBev will try to take over St. Louis-based Anheuser-Busch, some skeptics are saying that InBev may have trouble putting together a $50 billion financing package. Tight credit markets and bankers’ newfound aversion to risk could be a problem, Reuters reports:
“If it’s that size, it’s a big ask of the market, with huge risk in selling down,” one senior banker said on Monday. …
“This is pure kite flying in my opinion,” said a second banker. “The banks involved would have to guarantee the debt for the bid to proceed and I don’t see that happening in this market.” …
“I can’t see how anything like this could get done without an enormous fee being paid,” a third banker added.
Meanwhile, Advertising Age weighs in on the risk to Anheuser-Busch’s storied brands if it were taken over by a Belgiun company operated largely by Brazilians. Recall that Anheuser-Busch has been associated with patriotism and American ownership for a long time.
A-B distributors and agency executives who have worked on Bud and its sibling brands have grave doubts that a brand as overtly red, white and blue as Budweiser — and, by connection, its siblings — would remain credible with consumers. …
“It could be a disaster,” said an executive at one of A-B’s agencies. “It’s all-American above all else — the Clydesdales, all the imagery. It’s an enormous challenge” if the brand becomes foreign-owned. And there’s a lot at stake: In 2007, $8.5 billion of A-B’s $16.7 billion in total global revenue came from sales of Bud-family brands in the U.S.
The situation is made even more ironic by the fact that A-B has in the past been willing to play the patriotism card against competitors.
(Biz Buzz recalls that signs over the urinals at Busch Gardens in Williamsburg, Va. reminded visitors that A-B was American owned — unlike rival Miller Brewing Co., the signs helpfully pointed out).
We would be remiss not to mention an interview Biz Buzz had recently with Maureen Ogle, the author of “Ambitious Brew,” a history of the American beer industry. As the Anheuser-Busch takeover rumors picked up steam, Maureen admitted some of her associates would “fall on the floor laughing if they knew I was upset about this.”
Despite the Busch family not actually owning much stock, “The Busch genes are embedded in that company, and it’s really made an enormous difference,” said Maureen. She contrasted the Busch family’s charismatic weight and influence with the erosion of the Schlitz and Pabst brewing empires after the families stepped away.
“Take (the Busches) away and you just have another corporate brewer,” she said. ”History has not been kind when families have stopped being the heart and soul of the company.”
The International Brotherhood of Teamsters agrees. The union represents about 7,500 Anheuser-Busch employees nationwide.
“We would like it to see (Anheuser-Busch) remain an American company,” said Jack Cipriani, Director of the Teamsters Brewery and Soft Drink Workers Conference. “It doesn’t seem that employees fair well - in our experience in the brewery industry - when foreign suitors buy an American brewery,” he said in a statement.
Jeremiah McWilliams is a native Virginian who came to the Post-Dispatch in early 2007 to cover beer and other consumer products. He previously covered manufacturing for the Virginian-Pilot newspaper in Norfolk, Va. He is a graduate of Washington and Lee University. 
If Anheuser-Busch is sold and is no longer an American Company, I will boycott A-B brands along with practically everyone I know. We are loyal to A-B because they are American owned and operated. They’re about the only thing left in this country that is. We’d do everything in our power to persuade everyone we know to switch to Miller or another brand. Even though those brands are not American owned, they don’t claim to be. Budweiser is as American as baseball and apple pie. Take that away and you’re taking away a piece of our heritage. We may not own Anheuser-Busch, just like we don’t own our baseball teams, but we still consider them ours.
If AB goes foreign-owned, another good reason to drink Schlafly’s!
I’m not sure I would completely boycott AB if purchased by InBev, but I would certainly see myself drinking more Schlafly and Boulevard than I do now. I do agree that AB after being taken over by InBev would NOT be the same company as it was before. Do I REALLY like Bud Light? Yeah, but I also really like the image and what it represents. Take all that away, and it’s just another beer. Personally I think it would be a mistake for InBev to try to pull this deal off. I’m no ‘financial panther’ or anything, I just think that it will turn a lot of people off of Bud Light and change the brand in irreversable ways.
Tammy - Thank you for your comments - I couldn’t have said it better. I don’t know if it would make any difference if InBev knew how many people will be boycotting Busch and InBev products if the deal goes through….
Also, if this goes through, I’m pretty sure the IT project I am working on will be over now instead 5 - 6 years from now - won’t be easy finding something else at age 62. MANY people will be losing their jobs - bad news when so many companies leave town or outsource to India.
I also will not drink another AB product if this goes through. Honestly the only reason I do now is because AB is a St Louis/American company. I can definately find another brand and cheaper too!!
I agree with the bankers, if they need 50 BILLION that is a lot of money and I would think a huge risk to the banks to lend it, especially if they have to guarantee the funds.
Jeremiah can you go into detail what the “guarantee” means…is this similiar to a Letter of Credit? in which the people who are owed the money can collect from the bank the funds even if Inbev is lossing money, bankrupt or out of business?
I could not agree more with the advertisers, Inbev would ruin the branding and sales in my opion would suffer…
I would much rather spend my money on Schlafly or Boulevard then send it overseas. There is definitely something about drinking a beer made locally.
I can only imagine the St. Louis Region backlash to the selling of AB. I would gladly join a boycott. Tammy nailed it on the head. My In-Laws (in their 70s) are very concerned about their pension having retired from the brewery years ago. AB - sadly - is one of the last truely American industry giants. Lets hold onto it.
don’t worry, in the end i’m buying. moving the head shed to omaha so the union pacific and banquet foods folks will have something familiar around them.
warren
i guess if this deal happens, we will have a bunch of hoosiers swilling stag while being pulled around busch stadium on a donkey cart.
i work for a local distributor in ohio in the driver/sales position and the biggest reason i came to work for anheuser was the fact that it was an american owned company.i am proud of the products we distribute the quality and value are second to none.if inbev were to take over this american institution we would become another so-so company in the world of corporate raiders and once they destroyed it they would just walk away.please everyone lets save the last thing that is truly an american tradition and icon.