Mergers, Acquisitions and Takeovers Case Study

InBev’s Acquisition of Anheuser-Busch: A Mega Cross-Border Deal

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Abstract:
Anheuser-Busch, the US brewing giant, has accepted a renewed bid offer from InBev, a Belgian brewer and the world's largest brewer by volume, to end one of the most iconic names in the beer business. The merger would create a new global 'King of Beers' and also move SABMiller to a distant second position. The combined entity will be called Anheuser-Busch InBev and a key part of its strategy would be to make Anheuser-Busch's flagship brand, Budweiser, a global brand along the lines of Coca-Cola or Pepsi. InBev, with this acquisition, plans to insulate itself against the volatility of emerging markets as over half of its profits come from its Latin American operations. The case is intended to evaluate the strategic rationale for InBev's acquisition of Anheuser-Busch. Having failed in its pursuit to make the popular Brazilian brand 'Brahma' global, InBev now faces the tough task of making Budweiser global. The case also aims to analyse the possible impact of the acquisition on Anheuser-Busch and its brands and the global beer industry at large.

Pedagogical Objectives:

• To understand why firms undertake cross-border mergers and acquisitions and the problematic areas while doing so
• To highlight the consolidation that has happened prior to the InBev and Anheuser-Busch merger and chart out the reasons for brewers to consolidate.
• To discuss the strategic rationale for InBev's acquisition of Anheuser-Busch and the reasons for opposition to InBev's initial bid.
• To analyse the possible impact of the acquisition on Anheuser-Busch and its brands, and the global beer industry.
• To identify and analyse the post-merger challenges that the combined entity may face.

Keywords : InBev, Anheuser-Busch, US beer industry, Consolidation, Cross-border merger deal, Acquisiton, Mergers and acquisitions (M&A), Monopoly, Global beer industry, SABMiller, Cultural differences, Nation brands, Hostile acquisition, Budweiser

Contents : 
The Global Beer Industry
Sources of Volume Growth between 2006 and 2011
Top 10 Global Brewers, 2005
Market Capitalisation and Valuation Multiples
InBev and Anheuser-Busch: The Merger Deal
Anheuser-Busch’s Domestic Market Share, 2003–2006
InBev’s Beer Sales by Region, 2007
InBev and Anheuser-Busch’s Worldwide Presence
Impact of the Merge