Anheuser-Busch Sues Belgian Suitor

Anheuser-Busch has sued InBev, calling the Belgian brewer's plan to buy the iconic U.S. brewer "illegal." Matt Sepic, of member station KWMU in St. Louis, says the suit seeks to bar InBev from soliciting support from Anheuser-Busch shareholders.

MELISSA BLOCK, host:

From NPR News, this is ALL THINGS CONSIDERED. I'm Melissa Block.

MICHELE NORRIS, host:

And I'm Michele Norris. Anheuser-Busch, the maker of Budweiser beer, is suing one of the largest brewing companies in the world. InBev, based in Belgium, owns brands such as Stella Artois and Bass Ale, and it's been in the news recently because of its efforts to take over the Bud brand.

Anheuser-Busch earlier rejected a $46 billion offer from InBev. Matt Sepic is at member-station KWMU in St. Louis; that's where Anheuser-Busch is based. He's been following the story, and he joins us now. Matt, tell us more about this lawsuit.

MATT SEPIC: Well, it was filed today in federal court, and it calls InBev's unsolicited $46 billion offer to buy Anheuser-Busch nothing more than an illegal scheme. A-B says InBev concealed the fact that it does business in Cuba, and that could complicate efforts to do business here in the U.S. because of the embargo, and this follows on the heels of some action that InBev took yesterday.

They went to the SEC, filed papers saying that they want to get rid of the board of directors at Anheuser-Busch.

NORRIS: Now, the idea of InBev taking over Anheuser-Busch, one of the best-known American breweries, is not so popular here in the U.S., and I imagine it's very unpopular there in St. Louis.

SEPIC: That's an understatement. Nobody here likes the idea of this quintessential American brand being owned by a Belgian company that is run by Brazilians. A-B has cultivated this brand image for more than a century, and it's beyond unpopular.

All the major politicians here, from the mayor, both U.S. senators, the governor, say no way. In fact, the Democratic senator, Claire McCaskill from Missouri, met with Carlos Brito a few weeks ago in Washington, had a cold Bud Light with him, and still said no way.

NORRIS: Now A-B, as you call it, Anheuser-Busch, has a family name on it, although it is not a family-controlled company. Tell us about its board of directors.

SEPIC: That's true. The Busch family only owns about four percent of the stock. In fact, Warren Buffett's Berkshire Hathaway Company owns more than that. There's a board of directors. There's 13 members on it, and two weeks ago they said no way to this deal as well, unanimously voting it down, saying it is not enough. Sixty-five dollars a share does not reflect the true value of Anheuser-Busch.

But now InBev wants to oust that board of directors and put in place its own 13 people, who they say would be more open to a buyout, or as they call it a combination of the two companies.

NORRIS: Is there any talk about shutting down the brewery in St. Louis?

SEPIC: Not at all. People are scared about what InBev might do if they do buy the brewery, buy the company, Anheuser-Busch, as far as cutting jobs, but there's no talk of shutting down the Anheuser-Busch brewery here.

It's an old brewery. Some might say it's obsolete, but it is such an important part of the company's image. The tour is a must-see for anybody who visits St. Louis, right next to the arch, and it's part of that whole image that Anheuser-Busch has cultivated, as I said, for more than a century.

NORRIS: Now, you noted that the Senate delegation has gotten involved in these talks to some degree. Is there any sort of power play that Anheuser-Busch might have up its sleeve to stop this, beyond the lawsuit?

SEPIC: I'm not so sure at this point. What they are doing, though - last week, the managers and the board of directors outlined their own plan to boost shareholder value. That seems to be the name of the game here.

They want to cut a billion dollars in costs in the next year and a half to get that stock price up and make continued ownership, American ownership, more palatable to shareholders.

NORRIS: Matt Sepic, thanks so much.

SEPIC: You're welcome.

NORRIS: That was Matt Sepic of member-station KWMU in St. Louis.

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Bud, an American Icon, Pursued by Belgian Firm

Other American Business Icons Snatched Up By Foreign Firms

  • Ben & Jerry's, the celebrated Vermont ice cream maker, sold its business to Unilever, an Anglo-Dutch conglomerate, in 2000 for $326 million. Unilever owns other American companies as well.
  • Miller Brewing Company was purchased by the South African Breweries Limited in 2002 for $5.6 billion. The new company, SABMiller, was formed after this transaction.
  • IBM sold its laptop business to Chinese tech firm Lenovo in 2004 for $1.75 billion.
  • GE Plastics was purchased by SABIC, Saudi Basic Industries Corp., for $11.6 billion in 2007.
  • Germany-based Daimler-Benz paid $36 billion in 1998 for American carmaker Chrysler Corp. in what was described as a merger of equals. But the projected synergies between the two companies never materialized, and Daimler sold off the Chrysler Group to a private equity group in May 2007 for the fire sale price of $7.4 billion.

America's "King of Beers" may wind up in the hands of a Belgian brewer.

InBev has made a $46 billion bid for Anheuser-Busch, brewer of Budweiser, Bud Light and Michelob. If the deal goes through, InBev would become the world's largest brewer, adding the iconic American brands to a lineup that includes Stella Artois and Beck's. But the deal is a long way from being final.

News of the bid didn't go over well at Patty O's, a bar in the shadow of Busch Stadium in St. Louis, Mo. Bar manager Jason Armbruster says his regulars aren't happy about the news that the maker of Budweiser might be acquired by a foreign firm. He says comparisons to the foreign buyout of Miller Beer don't really apply.

"Miller's been owned by a foreign company forever, but Anheuser-Busch kind of stands for America," Armbruster says.

Throughout the 1980s, '90s and up till now, Anheuser-Busch staked out its marketing turf by propping up Bud's red, white and blue pedigree. Remember those "Here's to you, America" commercials?

InBev's CEO, Carlos Brito, says that mixture of branding and market savvy is a perfect fit for a world player like InBev. Brito laid out his plans for Anheuser-Busch to industry analysts on a conference call earlier Thursday.

"Budweiser is already one of the most recognized and beloved brands in the world," Brito said, "and it's our intention to expand Budweiser even further, through our extensive distribution network."

InBev's reputation for slashing costs is no secret, and it has many speculating that as many as 2,000 white- and blue-collar jobs in St. Louis may be on the line.

"Certainly, InBev is putting a positive spin on things, saying that this could be a great potential to increase Bud's global strength," says Don Volanski, who has worked in marketing at Anheuser-Busch for more than 15 years. "But just with the reputation of InBev — their cost cutting — I think has a lot of employees concerned how this might play out."

For the past five years, Anheuser-Busch's share price has been relatively stagnant at around $50 per share. InBev is offering $65 per share.

Former Anheuser-Busch marketing executive Bill Finnie says with so much shareholder profit on the line, a merger might be a foregone conclusion. But that doesn't mean it will be easy to make it work.

"Done wrong, it's going to be a disaster for InBev, for Anheuser-Busch and its people," he said. "Done right, it could be a huge win for all three."

InBev has stated that it would make St. Louis its North American headquarters, which could go a long way toward solving its public relations concerns.

Anheuser-Busch's board of directors has been quiet, saying only that it will pursue the course of action that is in the best interests of company shareholders.

Adam Allington reports from KWMU in St. Louis.

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