Justice Department: to buy Anheuser-Busch, InBev must sell Labatt USA
InBev of Belgium said today that it had reached an agreement with the U.S. Department of Justice that will allow it to buy St. Louis-based Anheuser-Busch without raising antitrust concerns.
The Justice Department will require InBev to sell its Labatt USA subsidiary – along with a license to brew, market, promote and sell Labatt beer in the U.S. – to achieve regulatory approval of its $52 billion acquisition of Anheuser-Busch.
Labatt USA, based in Buffalo, handles the importing, marketing and sale of Labatt-branded beer to wholesalers in the U.S. The DoJ said InBev will need to find an “independent third party” to market, distribute and sell Labatt beer — primarily Labatt Blue and Labatt Blue Light — for consumption in the U.S.
The new licensee must be approved by the DoJ. The sale of Labatt USA will occur after InBev buys Anheuser-Busch. A closing date for the takeover of Anheuser-Busch by InBev has not yet been announced, but Anheuser-Busch said InBev and A-B ”expect to complete the transaction as promptly as practical.”
The Justice Department said that the buyout of Anheuser-Busch, as originally proposed, would likely have caused higher prices for beer in the Buffalo, Rochester and Syracuse, N.Y., metropolitan areas.
The regulatory approval of the Anheuser-Busch buyout — albeit with a fairly minor tweak — was expected. Labatt is a small InBev subsidiary, selling less than 1 million barrels of beer in the U.S. last year. By contrast, Anheuser-Busch and its affiliates sold nearly 162 million barrels worldwide last year.
(Labatt USA should not be confused with InBev’s Canadian wing, Toranto-based Labatt Brewing. The Canadian operation is a fairly large one; InBev does not have to sell it. Labatt Brewing in Canada will be allowed to brew and supply the Labatt brands to the U.S. licensee for three years, but not longer.
In most of the U.S., InBev accounts for less than two percent of beer sales and engages in very little competition with Anheuser-Busch. But in upstate New York, InBev’s Labatt brands account for a significant portion of beer sales. Budweiser, Bud Light and Labatt brands are the biggest-selling beer families in Buffalo, Rochester and Syracuse, according to the DoJ.
The DoJ believed that in those markets, eliminating competition between InBev and Anheuser-Busch would have caused higher prices for beer.
“This divestiture will ensure that consumers will continue to benefit from the significant competition between the merging companies in upstate New York,” said Deborah A. Garza, Deputy Assistant Attorney General of the Antitrust Division.
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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. 
Unbelievable. How do you determine what blog topics you’re going to discuss? I can see the process now…. go to http://www.google.com, search for Anheuser Busch, and pick the first headline?
I work for A-B - I can tell you first hand that no one here knows for sure who is going to get the axe and when it will happen. Rumors have surfaced that IT, HR, Engineering and Cost Accounting will get get cut first, but every person is stressed beyond belief due to rampant rumors and no additional info from management. Rumors state that 2,300 jobs will be cut.
It’s a horrible work environment to be in right now…can you say Ulcers?
Bud4me - That is what is happening where I’m located as well. Some guys I know have put 20+ years in this company and they are getting thrown out on the street with no retirement to show for it.
You guys are right. At our brewery no one knows anything and rumors are rampant. We heard that along with engineering the IT, HR, and some business admin are going. Today I heard that there will be many cuts involving the union in Operations, Brewing, and QA. The rumor quality is being cut is troubling to a lot of us. It shows that Inbev does not really care about quality, just the bottom line. Not the way AB cared about it. We feel that even if you make the cut it won’t be long until Inbev runs the company into the ground. Ulcer city for sure.
DoJ, what????? make them sell lablatt 1st, then they can proceed with the deal, and any bank that uses any part of the $700 billion bail out that Busch put out there to finance this deal will show why we should not rush into bail outs like this till there are stipulations attached, we are bending over backwards to help another nations Company eliminate American Jobs….. Thanks “W”
Where is Toranto?
I work in Engineering and if I had a dime for all the rumors I’ve heard, I’d be able to take the early retirement package. Last status I heard on Friday was 1000 workers had signed up for the ERP package. That’s 300 short of the goal of 1300, and they need to get to the 1300 goal. There was also an e-mail floating around where someone in AB-IT met earlier this week with the CIO of the new North American zone and said IBM Global Services was not doing a good job in Canada, so they were not being looked to outsource AB-IT to them. Management is telling us nothing. Even when we ask, they say “I don’t know”. 2 weeks ago my management said InBev is probably going to cut our budget by 50%, to 200 million dollars. If we were scraping bottom at 400 million, there is really going to be nothing to work on with a capital of 200 million. I also heard from a reliable source that some type of announcement is happening on Monday, so maybe we’ll get more info on 11/17. I can say for a fact, nobody got anything done in my department last week because the stress level is through the roof.