The rumor mill is spinning tales of a merger between Anheuser-Busch and its bigger rival, Inbev. Join reporter Jeremiah McWilliams and columnist David Nicklaus for a discussion of the beer industry, the possibility of a deal and what it would mean for St. Louis.
Wednesday, May 28, 2008 12:00 PM CDT
dnicklaus: Consumers, of course, don't get to vote on any merger. But if Inbev wants A-B primarily because of its dominant market share, it probably isn't going to make any product or distribution changes that will drive customers away. Antitrust law shouldn't be much of an issue for Inbev and A-B. Inbev has only a tiny presence in the U.S., and Budweiser has very minor market shares in the countries where Inbev is large.
brad stamulis: So form what i hear InBev likes to "Trim the fat" of the companies it buys. Does this mean semi-massive layoffs. Even more importantly i work in advertising locally, and although AB is not one of my clients it is for about 10-15 other agencies and I would have to imagine that inBev would outsource it's creative talent or at least to bigger agencies in an effort to not become ethnocentric.
Jeremiah McWilliams: Brad, InBev likes to do "zero-based budgeting," which primarily means that every area of expense has to be justified every year, without regard to previous investment. From what I understand, it means pay cuts, although employees may get bigger stakes in the acquired companies to give them more reason to improve performance.
In terms of the creative work, I'm not sure what InBev typically does -- whether it outsources its creative talent. They have so many local brands spread across the world (about 200 of them) that it might be difficult to centralize all that work. And Budweiser and Bud Light are massive brands that get a lot of advertising and marketing support. Whether InBev would want to blow up the existing system of farming out creative work, or just tweak it...I don't know.
Spitler: If there is a buy out, how will that effect the pension of those that have already retired?
dnicklaus: That's one thing you shouldn't have to worry about, Spitler. A pension is a contractual obligation, and there's no way to get out of it short of bankruptcy.
mike: My question: What, if anything, can we do as a community to stop the sale of AB? Clearly, if In-Bev offers $65 a share, it will be hard to keep shareholders from pouncing on that offer. The long term result will be very very bad for St. Louis and probably In-Bev as they will have overpaid. The only thing worse than seeing all of that tradition go down the drain would be to see it go down the drain only to find out a few years later that it was a huge mistake.
Also, any chance the federal government steps in on antitrust grounds?