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.
A-B is the heart and soul of St. Louis, and all the efforts to bring our city up to speed and create more of an urban living downtown with shopping, hotels, restaurants and things to do will die if A-B is bought out by a foreign entity. The company contributes so much to the area, that it would be hard to imagine life if they were not based here. The St. Louis CVC, the RCGA and the other organizations fighting to improve the city have worked too hard to let one of our major employers leave or significantly decrease operations in town.
While boycotting is great, you can only do that after the fact, and it won’t stop a take over. Buy stock, become a owner, and vote no to the takeover, that is the best way to stop it.
It would be a good thing for American consumers if InBev bought A-B. Bud would actually start tasting like beer. InBev has a successfull track record buying local beer brands and preserving their cultural image. Case in point: after they bought Lowenbrau in Munich, the company kept its sponsorship of the Oktoberfest. Lowenbrau is still seen as an essentially Bavarian beer … Let me also point out to Ms Maureen Ogle that Inbev is owned 65% by families, and Bush is owned 4% by a family. Her point about what happens when families step away, in the context of InBev / A-B is therefore entirely invalid.
Drink Schlafly!
All my life Anheuser Busch has been a great inspriation to me. When I was young everyone talked about working for AB. When I became old enough I too joined the AB Team. I am very proud of the fact that our company is so quality conscious, so giving to charities and American owned. I feel like the whole Clydesdale hitch is a part of my heart. InBev cannot takeover our American owned brewery. Budweiser and Bud Light are names that every U.S. citizens have come to know and love. Please support Anheuser Busch and do whatever you can to help keep it American owned. Thanks to the Busch Family, Warren Buffet and all the people who help to make Anheuser Busch a great American Heritage. I work for AB and I am also an owner.
Julie
Hoegaarden brewery was shut by InBev, and brewing moved to one of massive breweries owned in Belgium, with no regards to brewing as was at smaller brewery, but high volume/high gravity. Due to public outcry, they (InBev) had to reopen the tiny classic brewery (thankfully, but for how long? Most stories are not that happy in regards to InBev. As well, great that A-B is still American-owned, but, they are a giant who swallow up smaller breweries or become majority share holders (i.e.: Goose Island, Rams Head, Redhook, Widmer, and the list goes on) and if not making money from one or other, can force the smaller breweries to lay off people, change recipes (water-down product for more mass appeal, very typical). The world of basically the same beer (Light, Lite, Stella, Fosters, Becks, insert name of tasteless, mass produced beer here) is going thru a bit of a problem for market share. Adding fruit flavor will not save flat sales, but producing better product could, but, that is too expensive to do. Look at Boston Brewings sales, or Summitt from Twin Cities, they can’t keep up with demand. Why? They are uniquely different, and do not rely on talking animals to sell a tasteless bland product. The big boys could learn from some of these companies instead of trying to buy them out.
Who would buy Budweiser made by InBev (foreign investment bankers), made as cheaply as possible,and made by a demoralized workforce whose good jobs with a great company are just a memory? Yeah, that sounds like a good idea. And what worse timing could there be than at a time when Americans are finally realizing that they have been sold out for the benefit of a small percentage mega rich people and corporations !! And what bank would be so stupid as to back a ridiculous idea such as this? No wonder so many banks are on the verge of failing. Why doesn’t InBev just burn $50 billion. At least it would be quick and affect less people.
I am getting so frustrated with this country not caring for its own people. this coutry was made on hardwork and sweat of the people. ITs not all about share holder value, its about emotion and pride. Maybe when no body has a job, the big wigs who care only about SHARE HOLDER value will wake up, but by then this country will be to far gone. Remember your kids and grand kids will need a job someday. BE American, buy and support Americans.
i am a bud,bud select, bud light lime, consumer i have drank it for many years since i was old enough to buy it hard core bud drinker i buy a case of bud every 2 weeks i will to boycott all a-b products if the deal goes through American owned American Brewed if i had the money to buy A-B i would i work 60 hours a week or more to buy A-B Beer Hermann ,Missouri
Sounds like it will happen, so Bud is history and I will never buy another. God, help the beautiful Clydes if they are sold to a country that eats horses.
So very sorry that we cant keep Anheuser-Busch.
I am a small AB stockholder. How could they do this without a vote!
My family and I have been Gold passport holders for the parks for a decade.
I only dring AB products while out at a bar/club or dinning, or I go without if they don’t stock AB.
If it’s in the hands of INBEV, they will never see a penny from my wallet ever.
I’m sickened by this. I remember well when AB played the patriotism card and waved the Flag for their own gain. Not so patriotic after all huh? When we were overseas in the Navy I remember what a treat it was to get a Bud, even when Bud was spelled in hebrew. Every sip was like hoisting the American Flag. To AB and every “american” who cashes in on this sale, you’re traitors and your treachery should NEVER be forgotten. Boycott? Nah that leaves open the chance that I’d ever again pop open a Bud. I will never use another AB product again. Their theme parks should be designated foreign soil and require a passport to get in. Too bad the government can’t do anything about it, but those people can’t even close an umbrella…