Mixing Beer Companies Brews Trouble

by Michael Haberman on May 30, 2008 · 0 comments


The Wall Street Journal did an analysis of the rumored purchase of Anheuser-Busch, by Brazilian/Belgian owned InBev. Some of the analysis dealt with the financial and marketing aspects of the deal, but much of it talked about the Human Resources issues that surround the deal. These include:
  • Anheuser is heavily unionized and InBev has been very tough with European unions, facing strikes and protests in Belgium and Newfoundland. In fact in Newfoundland InBev hired a hard-nosed security company to keep the union under control. (Harkens back to the days of the railroads and the Pinkertons.)
  • InBev is very harsh on non-performing employees, subjecting them to what as been described as isolated cases of moral harassment.
  • InBev has what is called a “high octane” culture, meaning very “rah, rah”. Low costs, high incentives. This does not match the much more traditional culture at A-B.
  • InBev has a tendency to replace management with Brazlians.

A-B has responded coolly to the interest by InBev and naturally, the unions representing the workers are not happy with the idea at all.

It is well known that many mergers and aquisitions fail, not for financial reasons, but for people reasons. Does this one make financial sense? Absolutely, InBev has an operating margin of 27% while A-B’s is 17%. But the people issues maybe difficult to overcome.

Another key to this may be the reaction of the American public. Messing with the clydesdales is downright UN-American. To me it would be like selling the White House. And with the political landscape poised to become the domain of union-friendly Democrats there might be some trouble in Congress and the White House with this one.

But if this occurs this will be one to watch. Will it succeed? Or will it become another Harvard Business School case study of one more M & A sunk do to people reasons?

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{ 2 comments… read them below or add one }

Anonymous June 5, 2008 at 11:22 pm

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 of 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.

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Victoria Zuffranieri July 14, 2008 at 5:23 pm

What’s on tap now for Budweiser? CNBC takes you inside America’s 130-year love affair with the King of Beers. Now that InBev has agreed to purchase the iconic American brand, CNBC’s “American Originals: Budweiser” offers a first look at the new reality for Bud. Watch CNBC on Thursday, July 17 at 9p/12a ET to see the side of Budweiser you’ve never seen before… the past the present and the future. Click here for web highlights.
http://www.cnbc.com/id/25348737/?__source=bg|pst|budprem|07102008|∥=bg

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